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Fund commentary

Aviva Investors Climate Transition Global Equity Fund

Month in review for April 2023

Max Burns

Fund Manager

Summary

Month in review

In what was a broadly positive month for global equities, the fund performance was hurt somewhat by disappointing stock selection in information technology. This was despite very strong selection in industrials, which is the fund’s largest active position versus the benchmark.

Looking ahead

We continue to be positioned somewhat defensively across the portfolio given our concerns for the global economy in 2023. We remain significantly underweight in the consumer discretionary sector.

Key facts

Fund managers
Max Burns since 07/2021,
 Andrea Carzana since 03/2022
Share class inception date
08/06/2020
Fund size (as at 28/04/2023)
GBP 574.2m
Benchmark
MSCI ACWI GR GBP

Fund overview

Objective: To grow your investment over and provide an average annual net return greater than the MSCI® All Country World Index over a 5-year rolling period by investing in shares of global companies responding to climate change by orientating their business models to be resilient in a warmer climate and a lower carbon economy; or providing solutions to mitigate climate change or help communities adapt to the adverse impacts of climate change.

Month in review

In what was a broadly positive month for global equities, the fund performance was hurt somewhat by disappointing stock selection in information technology, despite very strong selection in industrials, which is the fund’s largest active position versus the benchmark.  Good performance by holdings that are not eligible for inclusion in the fund was also a headwind for relative returns. These included Meta (Facebook), which rebounded on an improved outlook following cost cutting, and energy companies.

Positive standouts in April were our industrial holdings Hubbell and Rentokil.  Hubbell’s recent earnings beat consensus by 20% and the company raised 2023 guidance, which reinforces our positive view on the long-term outlook for their grid infrastructure end-markets.  Rentokil continues to please the market given the expected benefits of their recently completed Terminix acquisition. 

As investors question the outlook for growth in the second half of the year, many of our technology holdings underperformed, despite solid earnings reports.  For example, ASM International posted strong first quarter earnings, but the guidance for the second half of the year was slightly below consensus due to some weakness in the memory space. We continue to like the company for its leading position in single wafer ALD which is seeing increasing adoption in the leading-edge nodes.

Similar to ASM, STMicroelectronics posted strong first quarter numbers, but some disappointing comments on pricing softness in the second half of the year weighed on the stock.  Microsoft (a top overweight in the fund) stood out in the technology sector for beating consensus and earnings, raising guidance and outperforming on their report. 

Performance

For the latest Monthly, Cumulative, and Annualised Fund performance data please refer to the PDF factsheet below.

Past performance is not a guide to future performance
Performance basis: Month end returns, Mid to mid, net income reinvested, net of ongoing charges and fees, in the share class currency and net of tax payable by the fund. The figures do not include the effect of any exit or entry charge.

The Fund's performance is measured against the MSCI® All Country World Index.

Looking ahead Last updated 30 April 2023

We expect growth in developed markets to be weak in 2023, with most experiencing some form of mild recession, characterised by little growth and rising unemployment. Growth in the emerging market economies is expected to be a little firmer, reflecting an improving situation in China. The depth of recession is expected to be shallow, reflecting the relative strength of private sector balance sheets. Unlike deep recessions of the past, we do not expect a sustained period of deleveraging to act as a serious continuing headwind to growth. However, the potential for further negative supply shocks, particularly from global energy markets, tilts the balance of risks to our central view to the downside.

We continue to be positioned somewhat defensively across the portfolio given our concerns for the global economy in 2023. We remain significantly underweight in the consumer discretionary sector, as we continue to worry about consumer spending in a rising rate environment. 

Risks

Full information on risks applicable to the Fund are in the Prospectus and the Key Investor Information Document (KIID).

Documents

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Important information

THIS IS A MARKETING COMMUNICATION

The source for all performance, portfolio and fund breakdown data is Morningstar unless indicated otherwise. For share classes that have not yet completed 5 years, the cumulative performance chart will start from the first full month. All data is as at the date of the Factsheet, unless indicated otherwise.

Unless stated otherwise any opinions expressed are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as personalised advice of any nature. This document should not be taken as a recommendation or offer by anyone in any jurisdiction in which such an offer is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. Portfolio holdings are subject to change at any time without notice and information about specific securities should not be construed as a recommendation to buy or sell any securities.

For further information please read the latest Key Investor Information Document and Supplementary Information Document. The Prospectus and the annual and interim reports are also available on request. Copies in English can be obtained, free of charge from Aviva Investors, PO Box 10410, Chelmsford CM99 2AY. You can also download copies at www.avivainvestors.com

Issued by Aviva Investors UK Fund Services Limited, the Authorised Fund Manager. Registered in England No. 1973412. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119310. Registered address: St Helen’s, 1 Undershaft, London EC3P 3DQ. An Aviva company.

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