Pros: The thematic investing approach of this fund is a key determinant in why I have given it a broadly positive review. The focus on addressing the pressure on water, energy and resources places this fund firmly oriented towards achieving many of the 17 SDGs. The age of the fund (est. 1988) also provides you with long term data on returns alongside detailed information regarding the attitudes of past and present fund managers.
Cons: My primary concerns are that the fund focuses on long term capital growth and incomes (+5 years) making it unattractive if you require short term returns. Alongside this, due to the portfolios construction, it receives a high risk metric of 6/7 and has not kept up with the returns of new competitor funds such as Impax Environmental Markets.
Overall: This fund is perfect for environmentally conscious consumers who want to use their investments to make a positive commitment to the long-term protection of the environment. The joint benefits of the thematic investing approach and negative screening gives you peace of mind that your money isn’t funding unsustainable businesses and that you are aiding sustainable ones. This fund and company have decades of experience in this space, but I would make sure to weigh up the negatives of high risk and slightly lower returns against some competitor funds before investing.
The Jupiter Ecology Funds contains assets totalling £647.1 million spread over 56 holdings as of Jan 2021. At least 70% of the fund is invested in shares of companies whose core products and services address global sustainability challenges with the remaining 30% are invested in other assets.
Top 10 Holdings: Company | Holding (%) | Industry | Sustainalytics ESG Score |
Vestas Wind Systems | 5.3 | Wind Turbines | 16.2 (Low risk) |
Orseted | 4.6 | Offshore Wind | 20.5 (Medium risk) |
Azbil | 4.3 | Industrial Suppier | 13.2 (Low risk) |
Itron | 3.1 | Utility Management | No data |
Tomra Systems | 3.0 | Machinery Manufacturer | 28.2 (Medium risk) |
Schneider Electric | 3 | Electrical Equipment | 17.2 (Low risk) |
Regal-Beloit | 2.9 | Electrical Motors | 23.6 (Medium risk) |
Prysmian | 2.5 | Electrical Equipment | 26.5 (Medium risk) |
Waste Connections | 2.3 | Waste Management | 24.1 (Medium risk) |
Xylem | 2.3 | Water Technology | 16.4 (Low risk) |
The top 10 holdings have an average weighted ESG score of 19.9 which puts them in an overall ESG risk category of low. These companies have strong standings in renewable energy, manufacturing efficiencies and utility management which all contribute towards less intensive uses of energy and resources. The sectoral allocations are primarily in electronics (22%), industrial engineering (15%), support services (11.7%), utilities (7.4%) and alternative energy (7.3%).
The fund has a diverse regional allocation which reduces risk. However, the natural consequence of environmental solutions companies means there is an above average holdings in small and mid-cap firms (48.6%) which increases the risk and volatility of the fund. This results in the fund having a high risk rating of 6/7 which can put it out of your comfort zone if you are a risk averse investor.
The fund focusses on companies that provide solutions to long-term environmental and social problems specifically related to natural resources, water, land and energy. This means that the fund focusses on a thematic approach where all investments actively produce positive impacts rather than just limiting negative ones. This approach is far more sustainable than other funds and ETFs which only use ESG metrics to limit “bad outcomes” while meeting benchmarks. The identifiable SGDs the fund focusses on are clean water and sanitation; affordable and clean energy; industry, innovation and infrastructure; Climate action. I believe this fund directly evidences its impacts on these goals and therefore can be trusted to achieve environmental and social gains.
The fund follows Jupiter’s investment and environmental criteria which includes a range of ethical restrictions. The fund also utilises negative screening whereby any prospective company that generates more than 10% of revenue from any combination of armaments, alcoholic drinks, tobacco, pornography, nuclear power and gambling will not be allowed in the portfolio.
The fund was managed by Charlie Thomas the Head of Strategy, Environment & Sustainability who has managed since 2003 but it is now under the management of Jon Wallace who has been with the fund for 10 years. The team looks for strong management, sound balance sheets and defensible market positions. Their knowledge is extensive, clear and are passionate about ethical investing.
Jupiter Fund Management has an ESG rating of 20.6 putting it in the medium risk category. Jupiter is experienced in specialist thematic investments and does have a strong track record in this field. Jupiter’s stewardship policy incorporates voting, governance and sustainability with their proxy voting operations managed by their governance and sustainability team. Unlike the managers, Jupiter as a company is far less environmentally oriented and invests in all types of polluting and unsustainable sectors across global funds but none more so than others in the financial sector.