A global small and mid cap trust, which offers a highly differentiated portfolio and has delivered strong returns... No Images? Click here Impax Environmental Markets plc is a client of Kepler Trust Intelligence. Material produced by Kepler Trust Intelligence should be considered a marketing communication, and is not independent research. Impax Environmental Markets
IEM’s portfolio companies must have at least 50% of their revenues exposed to what the Impax team view as “environmental markets”. Current themes in the portfolio include connectivity within manufacturing processes (aka Internet of Things) and Biochemicals. Another emerging trend that is rapidly becoming mainstream is that of electric vehicles (EV). Many generalist investors aim to play this theme, but in many cases use rather “blunt” instruments – such as Tesla shares – which the Impax team view as too expensive for their valuation driven investment methodology. For Impax, this is part of a much larger electronics theme which they have been investing in for three years through electronic controls, and energy efficiency. Impax Asset Management’s thesis is reflected in the numbers. According to Impax their “Environmental Stocks” universe have grown earnings over the past five years by 7.9% pa, compared to average earnings growth for the MSCI ACWI of 3.3% pa. Moreover, forecast 12-month earnings growth for the IEM portfolio is 11.3%, against MSCI ACWI growth of 5% (Source: IEM Factset 31st Dec 2018). Underpinned by strong fundamentals, NAV total return performance over the last 15 years has been very strong. Within this, there have been several distinct periods of outperformance. Assuming the manager’s strong run continues further into 2019, the five-year numbers will start to look very strong once again, given the trust outperformed in 2015, 2016 and 2017. One explanation for this strong run could be, finally, a broader appreciation amongst mainstream investors of the themes that Impax has been highlighting (and investing along) for so many years. The trust current trades on a premium of 1.2% (21st March 2019). IEM has seen a significant improvement in demand for shares, such that the board have felt able to bring in their discount target from 10% to an expectation that they will seek to maintain the share price at or close to NAV (in normal market conditions). With cash of c 2%, the current level of net gearing is 4%, according to Morningstar, reflecting the manager’s positive outlook on prospects, underpinned by their expectation of strong earnings growth from the underlying portfolio companies. Important InformationImpax Environmental Markets plc is a client of Kepler Trust Intelligence. Material produced by Kepler Trust Intelligence should be considered a marketing communication, and is not independent research. This report has been issued by Kepler Partners LLP solely for information purposes only and the views contained in it must not be construed as investment or tax advice or a recommendation to buy, sell or take any action in relation to any investment. 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