Vegan bike helmets and burgers: Artemis Positive Future Stocks

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After the fastest sell-off in history, we saw global equities recover by around 60%, but it was anything but straightforward. We were uncertain as to what form the reopening of the global economy would take; what impact would future variants of Covid have; and, more recently, the burning question of whether inflation is transient or not. Investing for a full market cycle – ignoring any market volatility – sounds good in principle, but I’m not sure it has been that easy in practice.

We also had to take into account the acceleration of certain trends in our daily lives. Harnessing disruption and transformation in health, technology and climate has never been more important. But doing it with a sustainability lens in mind, without having to worry about short-term market movements, clearly has its advantages, and that’s what this new fund, which was recently added to our Elite radar list, is looking for. to do.

Artemis Positive Future is a global equity fund made up of a very concentrated portfolio of growing companies. Launched in April 2021, it is co-managed by Craig Bonthron, Neil Goddin, Jonathan Parsons and Ryan Smith. The whole team joined Artemis from Aegon (formerly Kames) where they managed a similar fund.

The team looks for companies with a significant positive impact on the world through environmental or social improvements. These companies will be at the center of technological and sustainable change, seeking to disrupt old economies to capture market share.

The emphasis is on the long term. Managers don’t care what the market can do in six, 12, or 24 months – market recoveries and inflation issues are parallel stories with the main focus: finding companies that will help the world recover. the challenges of sustainability.

Managers look for companies that create a positive impact in growing sectors. They use a quantitative filter to find businesses whose revenues are growing at a higher rate than the market and remove those that are pre-income (although they do accept businesses that are pre-profit). This filter is regularly reviewed on an ascending basis.

These two steps leave about 1,000 stocks. From this list, managers will then start looking for positively oriented companies. They seek the gateway where sustainability meets technology and achieves the goal of transformative positive impact. These will be companies whose products or services intentionally solve important problems in the world, rather than as a by-product of their business activities.

An in-depth analysis of the remaining 300 stocks is then conducted through a combination of quantitative and qualitative work. For the latter, the team will analyze the product or service of the company and ask if it is radical enough to make a change, and if it will capture the value generated in the sector. Managers will want to know if the leadership team is genuine in their approach or if they simply see it as a financial opportunity.

The final portfolio will consist of only 35-45 positions with weights based on achieving the maximum impact of a security, without adding excessive correlation of similar factors or too much risk.

The holdings currently go from MIPS, a Swedish company whose technology helps make bicycle helmets safer by cushioning the brain against spinning in a crash, to Alfen, which manufactures charging stations for electric vehicles and other systems. energy storage. The latter is interesting given that it is expected that more than 200 million charging points will have to be installed for small electric vehicles by 2030.

With the growing company research approach, the fund has a natural bias towards mid caps with typically over 60% of the fund in companies classified as small and mid-cap globally. This is further supported by the sustainability approach, where the stocks that are excluded are usually mega-cap companies. The sustainable approach offers an additional slant to non-cyclical growth companies, as it favors those that are linked to the long-term beneficiaries of changing consumer attitudes.

We organize over 200 fund manager meetings per year, and ESG activities are now discussed without exception. In an increasingly competitive world, we want to see how a fund stands out from its peers. This is precisely what this fund does – the managers strive for it to be the best fund in the industry, with sustainability considerations as performance enhancement. The focus on early stage mid-cap growth companies, in a concentrated portfolio, is both differentiated and bold and we believe this is a formula for future success.

Darius McDermott is Managing Director of FundCalibre


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