Market and portfolio update, change of benchmark
Jupiter Green Investment Trust PLC (the 'Company')
Legal Entity Identifier: 549300MFRCR13CT1L845
Market and portfolio update, change of benchmark
The Board of Jupiter Green is pleased to update the market and shareholders ahead of its continuation vote being held as part of the Annual General Meeting on 16 September 2020. In summary:
· The Covid-19 crisis is accelerating a number of structural sustainability trends; as a result, the fund manager is increasing the portfolio's allocation to smaller capitalization, higher growth opportunities which benefit from these multi-decade growth trends.
· As exposure to larger stocks with lower growth potential is being reduced, we would expect the 'income' component of the NAV total return to diminish, as these stocks tend to be the higher yielding ones.
· In light of the greater focus on smaller capitalization stocks, which will also give the fund a more distinct edge vs its peers, the benchmark of the Company will be changed to the MSCI Word Small Cap index.
Key points
· The Investment Adviser of the Company believes that the Covid-19 pandemic and the associated economic crisis has triggered an acceleration in a number of structural sustainability trends in which the Company is invested, including: sustainable agriculture, nutrition and health, sustainable mobility, clean energy, environmental services and the circular economy. As a result, the Investment Adviser has adjusted the investment focus of the Company to take full advantage of this acceleration.
· This adjustment will involve a greater investment in companies which are innovating technological solutions to sustainability challenges ('innovators') and companies that are already rapidly delivering proven sustainable solutions in their markets ('accelerators'). The Investment Adviser believes this should deliver higher capital growth and overall higher returns to shareholders. The Board also believes the changes will give Jupiter Green a clear differentiating edge, as these changes will result in a greater focus on smaller companies which larger funds can't access in a meaningful way.
· While the Fund Manager previously employed a more 'balanced' approach - balancing high growth stocks with lower growth and larger cap income payers - the Board believes the current market opportunities warrant a fully unconstrained approach aimed at delivering above-market "total return". We therefore anticipate lower dividend payments as a result of this approach.
· Jupiter Green is permitted to invest up to 5% of the net asset value of the Company in unquoted companies. While there are no unlisted companies in the portfolio currently, the Investment Manager may invest in such opportunities in the future, where there is the potential to achieve higher returns.
· In light of the greater focus on smaller capitalization stocks, the benchmark of the Company will be changed to the MSCI World Small Cap Index. We believe this widely-used index will provide a more suitable and understandable reference point by which investors can assess the performance of the Company.
· On 24th August, 2020, the Board announced that Jupiter Green has secured a £5 million loan facility to replace its expired loan facility. The Investment Adviser has already drawn £1.5m of this facility in order to invest in innovative companies which are providing solutions to the sustainability challenges faced by the world.
Acceleration in structural sustainability changes
In stark contrast to the aftermath of the Global Financial Crisis, there are already strong signals from governments, commercial organisations, and civil society of a hastening commitment to a more sustainable economy in the post-COVID recovery. The pandemic has not only emphasised the acute nature of systemic risks, therefore accelerating efforts to mitigate other such risks as climate change, but has at the same time presented an opportunity to direct financial and political capital to these ends as a means of re-invigorating economic growth.
In this landscape, we expect a sustained acceleration in the investment case across our seven sustainable solution themes. Furthermore, given the solutions to pressing sustainability challenges will by necessity be both innovative, and quickly deployed, this acceleration lends itself to investing with a primary focus on growth through companies in the 'innovator' and 'accelerator' phases of the sustainable solutions opportunity set.
Our Company's investment focus and strategy
Our Company's approach to sustainable solutions investing focuses on seven themes:
· Circular economy - solutions for sustainable materials and resource stewardship
· Clean energy - generation, storage and distribution
· Water - conservation and management
· Mobility - technologies and services for sustainable movement
· Energy efficiency - enabling a low carbon transition
· Sustainable agriculture, nutrition and health - solutions protecting natural resources and well-being
· Environmental services - pollution control, testing and impact management
The longstanding experience of the Investment Advisor shows that companies focused on solutions in these themes typically fall into one of three 'lifecycle' stages:
· Innovators - typically smaller and nascent companies with new and disruptive solutions that have high potential sales growth but are yet to gain mass market traction
· Accelerators - mid and large-cap companies that are delivering on their sales growth potential with accelerating market traction of already proven and scalable products and services.
· Established Leaders - typically larger companies with longstanding products and services in their market, lower levels of sales growth, but a greater potential to return capital to shareholders through dividends.
The Board believes that the above change of emphasis towards Innovator and Accelerator companies will allow Jupiter Green to offer investors an attractive investment opportunity in an asset class that is both growing in importance and with the potential to outperform the broader global equities.
Michael Naylor, Jupiter Green's chairman, commented: "There are already very clear signals of a step-change in the positive role that sustainable solutions will play in the coming economic recovery, presenting attractive long-term growth opportunities for the investors in Jupiter Green."
Charlie Thomas, head of Jupiter Asset Management's Sustainable Solutions team, commented: "Jupiter Green is at the forefront of investing in sustainable solutions with a primary focus on companies in the Innovator and Accelerator phases of their development. By addressing urgent big-picture global sustainability challenges, we see an accelerating multi-decade growth opportunity for these companies."
For further information, please contact:
Magnus Spence
Head of Investment Trusts and Alternatives
Jupiter Asset Management Limited, Company Secretary
investmentcompanies@jupiteram.com
020 3817 1000
2 September 2020
www.jupiteram.com/JGC
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