Jon Foster has co-managed the five-star rated Impax Environmetal Markets (IEM) with Bruce Jenkyn-Jones since 2002 and worked for Impax since 2000. Prior to that he worked at HSBC Investment Bank and Alchemy Partners.
This envinromental-focused fund is up 25% year to date and has delivered annualised returns of 14.7% over the past five years. Top holdings include packaging company DS Smith (SMDS) and wood-based fibre producer Lenzing (LNZ), which represent 2.6% and 2.2% of the portfolio respectively.
What does the fund do?
Invests globally in fast-growing businesses that operate across what we call “environmental markets”. This includes renewables, energy efficiency, water treatment, pollution control, waste management, recycling and sustainable food and agriculture.
Why invest in this trust?
Because it invests in companies that provide a solution to environmental challenges. Everyone is now realising there are a number of very substantial environmental challenges facing the global economy. A few years ago, investors were still doubting whether these issues ware real and happening, but they are happening and a lot faster we realised.
What are the biggest opportunities?
We have a strong need to use resources more efficiently as a population and for infrastructure to deliver basic services such as water, food and basic needs - that's a big opportunity.
And what are the biggest challenges?
We have a small-mid cap bias and smaller companies tend to be more volatile. We also have more industrials than many broader equity funds, which can also mean more risk. This is a fund for people who want to invest long-term.
What’s your worst ever investment?
Solar – it’s the trickiest sector to invest in because it's volatile and relies on subsidies. There is not a business model that consistently works and delivers good returns through the cycle so you have to be very nimble when you invest. If you get the timing right you can make lots of money, but you have to be trading around and it’s not my strength. I’m best when I'm identifying long-term winners.
...And your best?
Energy efficiency – it’s the strongest performer in our markets. These businesses are selling cost-saving products, with established technologies and are not reliant on subsidies. They also benefit from tightening efficiency standards, for example, the amount of insulation that people have in a house has been increasing. We have in our portfolio heat pumps suppliers based in Scandinavia, insulation players and businesses that make electric vehicle components that are doing very well and dominating their markets.
Which sector are you currently most excited about?
Sustainable food and agriculture has huge legs for growth. It's an area that is resource intensive, huge carbon emitters and very polluting, so there is an enormous scope to tighten up the industry and improve efficiency. The textile industry is another area set to be shaken up, we have a fibre specialist in the portfolio, which should benefit from more regulations and increased use of sustainable fabrics.
If you weren’t a fund manager…
I am a bit of a believer in alternative medicine, so maybe this is something I would look into - osteopathy, acupuncture, and approaching health from a different angle. Unfortunately it doesn’t pay very well.
What do you do in your spare time?
I have two young children who take care of most of my spare time. I love windsurfing and kite surfing, I find being in nature very liberating. I’ve just got back from South of Morocco – really good waves and wind out there.
How are you preparing for Christmas?
The tree is up. My wife is half French so we are heading over to France to have an enormous family get together. This involves five days of not leaving the house - eating, drinking and discussing at the end of a meal what we’re going to eat at the next meal.
Which two guests, dead or alive, would you invite to a dinner party at your place and why?
Leonardo Da Vinci. He is scientific and visionary, and I like his combination of creativity and intelligence. And Elon Musk. We don’t have Tesla in the portfolio because of valuation, but as an individual he is fascinating. I like his ability to see and change the industry, to get stuck into ideas other people would never even contemplate.
And you can come as well if you like.
