Interim Management Statement

RNS Number : 0541A

Jupiter Green Investment Trust Plc

13 February 2014

 



Jupiter Green Investment Trust PLC

Interim Management Statement for the three months to 31 December 2013

The Board of Jupiter Green Investment Trust PLC (the "Company") is pleased to announce its interim management statement for the three months ended 31 December 2013. 

For the three months ended 31 December 2013 the total return for the Company was 8.7% compared to a return of 4.7% for the Company's benchmark index, the MSCI World Small Cap Index. During the same period, the FTSE ET100 Index returned 6.0%.*

*Source: Jupiter Asset Management.

Investment Manager's Report

Market review

Stock markets in the West ended 2013 strongly, although not without bouts of volatility. The debate over the US government's debt ceiling weighed heavily on sentiment in the early part of October, but the market quickly regained confidence when an eleventh-hour agreement was struck. In November, economic data (payrolls and GDP) in the US generally came in ahead of expectations, while trade figures and details about plans to liberalise markets in China ameliorated some of the concern about the economic slowdown that has impeded sentiment in recent months. In Europe, the ECB cut rates by 25 basis points to combat persistent deflationary forces, while economic data continued to show modest improvement. In the UK, the Bank of England brought forward the date at which it expects unemployment to fall to its 7% target rate to the fourth quarter of 2014, some 18 months earlier than previously indicated. The UK stock market suffered as a result.  In December, news that the US Federal Reserve intends to trim £10bn off its monthly quantitative easing programme was broadly welcomed by the market amid an increasingly robust growth outlook for the US economy. This news, combined with persistent liquidity problems in China, weighed on sentiment in several emerging markets.

The environmental sector continued to climb from its lows in early 2013. As indicated in previous reports, the sector's revival has been built upon improvements to the supply and demand dynamics in key areas, such as renewable energy, a firmer policy backdrop in China and the US and the broader economic revival in the West.  

Portfolio review

The Company outperformed its broad-based FTSE All World index and the FTSE ET100 index. Engineering consultancies RPS Group, Stantec and WS Atkins were among the Company's best performers during the period. An increase in capital spending in the Western economy has helped boost profitability for these companies in recent quarters. Elsewhere, Johnson Matthey's first half results beat expectations on the back of good demand for its emission control technologies.

Less successful was waste-to-energy business Covanta Holdings, which lost ground after announcing uninspiring results. Although the business has a reasonable project pipeline and should see a boost to free cash flow in 2015, short term revenues have been hit by unfavourable power price resets. Ball bearing specialist SKF weakened after it issued a profit warning citing slower growth in its aftermarket business. Meanwhile, Whole Foods Markets saw profit taking. While the company's Q3 results beat market expectations on EPS and EBIT metrics, reflecting prudent cost controls, it also experienced a deceleration in sales growth.

Outlook

The global environmental sector has entered 2014 in relatively good shape. Supply and demand dynamics in renewable energy have improved markedly, while a broader pickup in economic activity has started to filter through to sectors such as waste management that tend to be slow to recover after a downturn. Meanwhile, an improved economic backdrop is translating into greater optimism among business leaders and to more confident growth plans. These are encouraging dynamics which could lead to further progress in the area in the year to come. However, we remain mindful that an accelerated withdrawal of quantitative easing in the US would pose a particular risk to global stock markets, especially in emerging markets, and continue to watch developments closely. 

From an investment point of view, we remain focused on the process of "mainstreaming" whereby environmental products and services become more economically competitive compared to mainstream offerings. Energy efficiency, which is among the largest themes in the Company, is an area which is enjoying a rapid rise in mainstream competiveness. The International Energy Agency estimates that between 2005 and 2010 energy efficiency measures across 11 of its member countries (Australia, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom and the United States) saved the energy equivalent of US$420 billion worth of oil.* This has led IEA Executive Director Maria van der Hoeven to suggest that energy efficiency is becoming the world's "first fuel". Included in this theme are businesses which produce energy saving solutions for buildings, transportation (rail, road and air) and heavy industry.

Charles Thomas

Jupiter Asset Management Limited

Investment Manager

13 February 2014

Total Assets as at 31 December 2013: £38,368,192

Shares in Issue

Shares bought back in the period	2,186,495
Share in issue as at 31 December 2013	32,828,659
Shares held in Treasury at 31 December 2013	6,438,934
Total Voting Rights as at 31 December	26,389,725

	Net Asset Value (p)	Market Price (p)
Ordinary (undiluted) excluding income/expenses	145.39	138.38
Ordinary (undiluted) including income/expenses	144.61	138.38

Portfolio Distribution as at 31 December 2013

	%
United Kingdom	26
North America	42
Europe	15
Japan	9
Other	8
Cash and fixed interest	0
	100

The Company's exposure to other UK listed investment companies was nil on 31 December 2013.

Top Ten Holdings as at 31 December 2013

Company	Country of Listing	Activity	% of Total Assets
Wabtec	United States	Infrastructure	3.6
Cranswick	United Kingdom	Demographics	3.4
Ricardo	United Kingdom	Resource Efficiency	3.4
Stantec Inc	Canada	Infrastructure	3.3
LKQ	United States	Resource Efficiency	3.0
RPS Group	United Kingdom	Infrastructure	3.0
Smith A 0. Corp	United States	Resource Efficiency	2.9
Johnson Matthey	United Kingdom	Resource Efficiency	2.6
United Natural Foods	United States	Demographics	2.5
Novozymes A/S	Denmark	Demographics	2.5
			30.2

Comparative Performance to 31 December 2013

	Three months %	One year  %	Since launch %
Total Assets*	8.7	35.0	57.9
MSCI World Small Cap Index (total return)	4.7	28.0	191.7
Ordinary Share NAV	8.7	35.0	49.8
Ordinary Share Price	6.7	39.8	38.3

* Performance adjusted for share issue/cancellation since launch

Material Events

On 28 November 2013, the unaudited Half Yearly Report for the six months to 30 September 2013 was published.  Since the end of the period 85,000 shares have been bought back by the Company.

There were no other material events or transactions that have impacted on the financial position of the Company during the period.

The Company's Investment Objective

The Company's investment objective is to generate long-term capital growth through a diverse portfolio of companies providing environmental solutions.

The Company's Investment Policy

Asset Allocation

The Company invests globally in companies which have a significant focus on environmental solutions. Specifically, the Company looks to invest across three key areas: infrastructure, resource efficiency and demographics.

The Company's portfolio has a bias towards small and medium capitalisation companies. It invests primarily in securities which are quoted, listed or traded on a recognised exchange.  However, up to 5 per cent. of the Company's Total Assets (at the time of such investment) may be invested in unlisted securities.

The individual portfolio manager selects each stock on its individual merits as an investment rather than replicating the relevant company's weighting within the Company's benchmark indices.  The Company's investment portfolio is therefore unlikely to represent the constituents of its benchmark indices, but instead is intended to offer a well-diversified investment strategy focused on maximising returns from the prevailing economic background.

The individual portfolio manager may enter into contracts for differences in order to gain both long and short exposure for the Company to indices, sectors, baskets or individual securities for both investment purposes and for hedging or efficient portfolio management purposes. The ability to maintain a portfolio of both long and short positions provides the flexibility to hedge against periods of falling markets, to reduce the risk of absolute loss at portfolio level and to reduce the volatility of portfolio returns. The portfolio manager may also invest in single stock, sector and equity index futures and options.

Risk is also mitigated by investing mainly in quoted companies on registered exchanges, ensuring full regulatory compliance for all underlying quoted investments. There are no specific stock and sector size limitations within the portfolio, but the manager is expected to provide sufficient stock, sector and geographic diversification to ensure an appropriate trade-off between risk and return within the portfolio. In order to ensure compliance with this objective there is a two tier monitoring system. Firstly, the manager's portfolio is assessed monthly by the Jupiter Asset Management Limited Performance Committee, which is headed by the Chief Executive of Jupiter Asset Management Limited. Secondly, the Board is provided with a detailed analysis of stock, sector and geographic exposures at the Company's regular Board meetings.

Risk Diversification

The following investment restrictions are observed:

·      no more than 15 per cent. of the Total Assets of the Company (before deducting borrowed money) is lent to or invested in any one company or group (including loans to or shares in the Company's own subsidiaries) at the time the investment or loan is made.  For this purpose any existing holding in the company or group concerned is aggregated with the proposed investment;

·      distributable income is principally derived from investments.  Neither the Company nor any subsidiary conducts a trading activity which is significant in the context of the group as a whole;

·      not more than 10 per cent., in aggregate,  of the value of the Total Assets of the Company (before deducting borrowed money) is invested in other investment companies (including investment trusts) listed on the Official List.  Whilst the requirements of the UK Listing Authority permit the Company to invest up to this 10 per cent. limit, it is the Directors' current intention that the Company invests not more than 5 per cent., in aggregate, of the value of the Total Assets of the Company (before deducting borrowed money) in such other investment companies; and

·      the Company at all times invests and manages its assets in a way which is consistent with its object of spreading investment risk.

Gearing

The Company may utilise gearing, at the Directors' discretion, for the purpose of financing the Company's portfolio and enhancing Shareholders returns.  In particular, the Company may be geared by bank borrowings which will rank in priority to the Ordinary Shares for repayment on a winding up or other return of capital. 

The Articles provide that, without the sanction of the Company in general meeting, the Company may not incur borrowings above a limit of 25 per cent. of the Company's Total Assets at the time of drawdown of the relevant borrowings.  No credit facility has been negotiated by the Company to date.

The level of any gearing of the Company's Total Assets from time to time will be disclosed in the monthly factsheets which are available from www.jupiteronline.com/green and on request from the Company Secretary.

In accordance with the requirements of the UK Listing Authority, any material changes in the principal investment policies and restrictions (as set out above) of the Company will only be made with the approval of Shareholders by ordinary resolution.

Company Information

Year end:	31 March
Results:	Final results to 31 March 2014, due to be announced June/July 2014

Monthly fact sheets for the Company are available for download from www.jupiteronline.com/green.

The Company's Ordinary shares are listed on the London Stock Exchange and the prices are published in the Financial Times under `Investment Companies'.

The Net Asset Values of the Company's Ordinary shares are calculated daily and can be viewed on the London Stock Exchange website at www.londonstockexchange.com (under the heading 'Market News').

For further information, please contact:

Richard Pavry

Head of Investment Trusts

Jupiter Asset Management Limited

[e-mail] 

020 7314 4822

The Company's Registered office is at 1 Grosvenor Place, London SW1X 7JJ.

This interim management statement has been prepared solely to provide information to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules.

By order of the Board

Jupiter Asset Management Limited, Company Secretary

13 February 2014

 

END

 

 

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