Impax Environmental Markets has not performed well over the last year due to having to write down some of the unlisted holdings in its portfolio, but it has made very strong cumulative net asset value (NAV) returns over three and five years, beating the FTSE All-Share and FTSE All World indices as well as sector peers such as BlackRock New Energy and Jupiter Green Investment Trust.
Although analysts such as Tom Tuite Dalton of broker Oriel Securities are concerned that there might be further write-downs to its unlisted portfolio, some advisers think it is a good time to buy into an investment trust with strong long-term record.
Impax Environmental's share price has made negative returns over three and five years, although this can in part be attributed to general sentiment about clean energy. Impax Environmental Markets continues to trade at a wide discount to NAV of around 21 per cent, nearly double its 12-month average, so this could be an opportunity to buy into an investment team that has delivered strong returns in the past. But you should have a high risk appetite and a long-term investment horizon.
Impax Environmental Markets mainly invests in listed companies that deliver basic services such as energy, water, and waste more cleanly and efficiently than traditional peers. This leads it to sectors such as renewable and alternative energy, energy efficiency, water infrastructure and related technologies, pollution control, waste management and environmental support services.
Impax says this investment area has developed because of government liberalisation of basic service industries, legislation to reduce environmental damage and the falling cost of technology.
The investment trust selects shares from a broad universe of more than 1,400 listed companies. Its investments are focused on developed markets with companies listed in Europe accounting for more than 40 per cent of assets, and in North America 37 per cent of assets.
Its investment team of 12 selects companies according to their potential for generating capital growth, and it seeks:
• compelling business propositions based on proven technology;
• management quality;
• exposure to global environmental policies and regulations; and
• new growth markets.
Impax has run environmental funds for more than 10 years and has an experienced investment team.
IMPAX ENVIRONMENTAL MARKETS (GB0031232498) | |||
| PRICE: | 92.05p | GEARING | 99% |
| AIC SECTOR: | Sector specialist: environmental | NAV: | 116.3p |
| MARKET CAP: | £283.25m | PRICE DISCOUNT TO NAV: | -21.34% |
| No OF HOLDINGS: | 81* | 1-YEAR ANNUALISED PRICE PERFORMANCE: | -20.17% |
| SET-UP DATE: | 22 February 2002 | 3-YEAR ANNUALISED PRICE PERFORMANCE: | 2.36% |
| TOTAL EXPENSE RATIO: | 1.1% | 5-YEAR ANNUALISED PRICE PERFORMANCE: | -2.08% |
| YIELD: | 0.81% | MORE DETAILS: | impax.co.uk |
Source: Morningstar & *Impax.
Performance data as at 13 October 2011
TOP 10 HOLDINGS as at 30 September 2011
| Nibe | 3.3 |
| LKQ | 3.2 |
| Pall Corp | 3.1 |
| Horiba | 3.0 |
| Regal-Beloit | 2.5 |
| Clean Harbors | 2.5 |
| EDP Renovaveis | 2.4 |
| Vacon | 2.3 |
| Kingspan | 2.3 |
| Daiseki | 2.3 |
| Sector breakdown | % |
| Energy efficiency | 25 |
| Renewable energy | 19 |
| Environmental support services | 5 |
| Waste management | 26 |
| Pollution control | 6 |
| Water infrastructure | 16 |
| Cash | 3 |
