Green team cuts back for growth

Jupiter Green investment trust has voted to end a shared structure and bring its management fully in-house, while broadening the scope of its portfolio, as it aims to become £100m in size.

The Jupiter Green investment trust is embarking on a period of change that in many ways reflects the morphing of the industry in which it invests.

Following the annual general meeting of the trust last week, the move to break its shared management structure with Winslow, a Boston-based advisory firm, and bring the portfolio wholly in-house has been approved. While the management structure has contracted, Charlie Thomas, the trust’s manager, says he is working to expand the scope of the portfolio.

”With the globalisation of this sector, we felt we had to be more flexible to take advantage of opportunities”

“Over the past few years what became apparent was the globalisation of this sector,” he says. “We felt we had to be more flexible to take advantage of opportunities when they present themselves.”

As part of the changes, Thomas aims to bring in new facets to the portfolio, including the ability to use futures. This will entail some turnaround of holdings but it will not mean a wholesale shift in the trust’s investment philosophy.

A big concern for the sector has been the threat posed by government austerity drives, because public spending has been one of the core drivers of growth in environmental industries. (article continues below)

While there are concerns about Europe, the manager says there is still a substantial amount of stimulus spending to come through from America and, in particular, from emerging markets.

“There is often a missing part of green portfolios,” Thomas says. “Energy efficiency is a significant story in the long term. The policy debate in America has moved on to discussions over oil spill accountability, and part of this is a renewed push towards energy efficiency.”

In waste management there is a key landmark approaching that many companies in the sector expect to provide a major driver to profits. While the cost of recycling continues to fall because of economies of scale, the opposite is happening to landfill taxes as space becomes limited.

Thomas says the industry is coming close to the “cross-over point” where it becomes more cost-effective to ­recycle waste than to dump it.

While these sectors receive growing attention in western economies keen to reduce reliance on fossil fuels and cut energy costs, they have attracted much less notice in emerging markets.

“The emerging markets story has really been more orientated towards renewables as it has mainly been about demand growth and bringing new energy capacity online,” says Thomas. “There are signs that this is beginning to change, although the pace of this shift remains unclear.”

Environmental concerns might have been expected to become a casualty of the push for austerity. However, the possibility of efficiency savings along with the promise of investing in a growth industry has kept interest buoyant. Thomas is hoping that the trend continues: “Hopefully we can bring the fund up to around £100m, and I think that’s realistic.”