Jupiter Green (JGC) released an update ahead of its continuation vote being held at the forthcoming annual general meeting on 16 September 2020.
In summary, the board noted:
- “The COVID-19 crisis is accelerating a number of structural sustainability trends; as a result, the fund manager is increasing the portfolio’s allocation to smaller capitalization, higher growth opportunities which benefit from these multi-decade growth trends;
- As exposure to larger stocks with lower growth potential is being reduced, we would expect the ‘income’ component of the NAV total return to diminish, as these stocks tend to be the higher-yielding ones; and
- In light of the greater focus on smaller capitalization stocks, which will also give the fund a more distinct edge vs its peers, the benchmark of the company will be changed to the MSCI World Small Cap index.”
‘COVID-19 has triggered an acceleration in a number of structural sustainability trends’
JGC’s manager believes that the pandemic and the associated economic crisis has triggered an acceleration in a number of structural sustainability trends, including: sustainable agriculture, nutrition and health, sustainable mobility, clean energy, environmental services, and the circular economy. In response, the manager has adjusted JGC’s investment focus take full advantage of this acceleration.
This adjustment will involve a greater investment in companies which are innovating technological solutions to sustainability challenges (‘innovators’) and companies that are already rapidly delivering proven sustainable solutions in their markets (‘accelerators’). The manager believes this should deliver higher capital growth and overall higher returns to shareholders. JGC’s board also believes the changes will give the fund a differentiating edge, as these changes will result in a greater focus on smaller companies which larger funds cannot access in a meaningful way.
Lower dividends anticipated as part of the change in approach, while benchmark to be changed to the MSCI World Small Cap Index
The board notes that while the manager previously adopted a ‘balanced’ approach – balancing high growth stocks with lower growth and larger cap income payers – the board believes the current market opportunities warrant a fully unconstrained approach aimed at delivering above-market “total return”. They, therefore, anticipate lower dividend payments as a result of this approach.
In light of the greater focus on smaller stocks, the benchmark of the JGC will be changed to the MSCI World Small Cap index. The company’s board believe this widely-used index will provide a more suitable and understandable reference point by which investors can assess the performance of the Company.
Acceleration in structural sustainability changes much more pronounced than after the GFC
JGC go on to note that “In stark contrast to the aftermath of the Global Financial Crisis, there are already strong signals from governments, commercial organisations, and civil society of a hastening commitment to a more sustainable economy in the post-COVID recovery. The pandemic has not only emphasised the acute nature of systemic risks, therefore accelerating efforts to mitigate other such risks as climate change, but has at the same time presented an opportunity to direct financial and political capital to these ends as a means of re-invigorating economic growth.
In this landscape, we expect a sustained acceleration in the investment case across our seven sustainable solution themes. Furthermore, given the solutions to pressing sustainability challenges will by necessity be both innovative, and quickly deployed, this acceleration lends itself to investing with a primary focus on growth through companies in the ‘innovator’ and ‘accelerator’ phases of the sustainable solutions opportunity set.”
JGC: Update from Jupiter Green ahead of continuation vote as COVID-19 accelerates structural sustainability changes
Don’t see what the fuss is about, it didn’t really pay a dividend anyway