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Fund commentary
Aviva Investors Climate Transition Global Equity Fund
Quarterly review for the three months to 30 June 2024
Max Burns
Fund Manager
Summary
What happened in the market
How the fund performed
Looking ahead
Key facts
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.
What happened in the market
In the second quarter, equities built on their strong returns at the start of the year as confidence was boosted by signs of inflation moving back in the right direction in the US. Otherwise, while economic data was something of a mixed bag, investors continued to believe that the US economy would avoid a sharp slowdown and achieve a so-called soft landing. Emerging markets outperformed developed markets, boosted by a strong return from China. This offset disappointing performance from Latin America. The leading indices for sterling investors were the American S&P 500 (+4.2%) and the UK’s FTSE All-Share (+3.7%). The US was buoyed by further positive performance by the large technology players. The main disappointment was Japan, where the Topix index was pulled into negative territory (-4.4%) for sterling investors by the weakness of the yen. Returns from Europe were also underwhelming as investors were spooked by the results of the EU parliamentary elections, which saw a notable shift to the right in the core countries.
How the fund performed
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.
The fund produced a positive return but underperformed the benchmark index over the quarter. Stock selection was a negative factor, particularly in the information technology (IT) sector. It was also weak in materials and consumer discretionary. On the other hand, it contributed positively and most notably in industrials and communication services. Sector allocation had a mildly positive impact. While the overweighting of industrials weighed on performance, the overweight to IT and the underweight exposure to consumer discretionary benefited fund returns.Looking ahead Last updated 30 June 2024
We remain focused on finding businesses in our process where the market does not value the climate opportunity for that particular business model correctly in the long term. We are significantly overweight in the industrial sector. Our holdings are tilted defensively towards business models that have resilient revenue streams with robust pricing. We are also overweight in IT. We remain significantly underweight in the consumer discretionary sector as we continue to worry about consumer spending in a high interest rate environment. We initiated a position in Carlisle in April. The company manufactures a variety of products for the roofing, real estate, construction, and manufacturing industries and is primely positioned to capitalise upon the structural shift towards improved building efficiency. Carlisle has its near-term SBTi (Science Based Targets initiative) approved to align with 1.5 degrees and has committed to net-zero and aims to cut scope one and two by 42% and scope three by 52% per pound produced by 2030 (from 2021 base).
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Important information
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
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