Pictet's Luciano Diana, manager of the Pictet-Global Environmental Opportunities fund, explains the fund's approach to selecting environmental stocks.
It is not enough for portfolio holdings to simply be "good citizens" to be considered for inclusion in the £1.6bn Pictet Global Environmental Opportunities fund, according to its manager Luciano Diana.
The strategy, which has been in place since October 2014, sees the manager invest in companies with business models that provide a solution for one of two types of issues: either natural resource efficiency, or environmental quality and pollution control. The fund has returned 5.8% over one year to 30 April 2020, versus the MSCI AC World index losses of -1.77%. The fund has outperformed its benchmark MSCI AC World index over three and five years.
However, the manager said: "It is not enough to be good citizens, it is not enough to have a good ESG profile, so to speak. These companies also need to offer solutions to environmental challenges and that is why we operate from a relatively narrow investment universe."
While the manager does not apply any exclusions to countries or regions, he currently has no exposure to India in the fund, noting "we would like to, but we struggle to find direct and indirect plays on that country".