Impax Environmental Markets (IEM) is the standard bearer for sustainability-focussed trusts. For nearly two decades, it has offered exposure to mid- and small-cap companies exposed to the transition to a more sustainable economy. The last few years have seen what has historically been a niche area of investment finally become mainstream. IEM has ridden this wave of investor enthusiasm, reflected in both strong NAV performance relative to world equities, but also a discount giving way to a premium rating. The Impax team are fundamental stock pickers that invest in growth companies using a disciplined investment process and a strong valuation overlay. Mindful of the risks presented by current higher valuations, they are aiming to position IEM for defensive growth. When we caught up with the managers recently, they commented that they have never been more convinced of the long-term case for their strategy. With markets performing strongly, the team have been more active in terms of turnover than historically. The team tend to trim their exposure of more expensive holdings, recycling capital into better valued prospects. Whilst wary of overall valuations, the team report being reassured by the portfolio’s underlying earnings continuing to grow faster than the wider market. This is in line with the historical pattern, in which IEM’s portfolio has delivered stronger underlying earnings growth relative to the wider index. Higher valuations are a factor in the managers’ reluctance to employ gearing, and IEM has net gearing of c. 1.4% currently. Investor demand for what is a capacity constrained strategy has seen the premium at which the shares trade expand to c. 5%.
25 Oct 2021
Impax Environmental Markets - Overview
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Impax Environmental Markets - Overview
Impax Environmental Markets PLC (IEM:LON) | 386 0 0.0% | Mkt Cap: 1,028m
- Published:
25 Oct 2021 -
Author:
William Heathcoat Amory -
Pages:
6
Impax Environmental Markets (IEM) is the standard bearer for sustainability-focussed trusts. For nearly two decades, it has offered exposure to mid- and small-cap companies exposed to the transition to a more sustainable economy. The last few years have seen what has historically been a niche area of investment finally become mainstream. IEM has ridden this wave of investor enthusiasm, reflected in both strong NAV performance relative to world equities, but also a discount giving way to a premium rating. The Impax team are fundamental stock pickers that invest in growth companies using a disciplined investment process and a strong valuation overlay. Mindful of the risks presented by current higher valuations, they are aiming to position IEM for defensive growth. When we caught up with the managers recently, they commented that they have never been more convinced of the long-term case for their strategy. With markets performing strongly, the team have been more active in terms of turnover than historically. The team tend to trim their exposure of more expensive holdings, recycling capital into better valued prospects. Whilst wary of overall valuations, the team report being reassured by the portfolio’s underlying earnings continuing to grow faster than the wider market. This is in line with the historical pattern, in which IEM’s portfolio has delivered stronger underlying earnings growth relative to the wider index. Higher valuations are a factor in the managers’ reluctance to employ gearing, and IEM has net gearing of c. 1.4% currently. Investor demand for what is a capacity constrained strategy has seen the premium at which the shares trade expand to c. 5%.