Investing in companies that make a difference
- 03 July 2023 (3 min read)
AXA ACT People & Planet Equity is a broad-based strategy that utilises AXA IM’s extensive resources and experience to help investors channel capital towards solutions to some of the world’s most urgent environmental and social challenges. Portfolio Managers Ashley Keet and Anne Tolmunen outline some of the holdings that encapsulate the strategy’s investment themes.
AXA IM’s ACT range already includes strategies addressing areas such as the Clean Economy, Biodiversity and Social Progress. These are ideal for investors seeking to invest in specific themes. But for investors looking to invest across a broad range of issues, it can be a challenge to allocate assets across different strategies.
This is where AXA ACT People & Planet Equity comes in. We take a global view, looking at companies big and small, with the dual objective of supporting companies that are making a measurable, positive impact in the world while providing a financial return for investors.
AXA IM’s long experience in the impact space and the broad scope of the fund mean that we can truly be stock pickers. We’re not looking at a small number of companies that pass across our point of view: we are able to assess thousands of companies bursting with innovative and impactful ideas, thanks to the extensive global resources of AXA IM at our disposal.
Social Progress |
Energy Transition |
Biodiversity |
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Looking for businesses with solutions that could grow
We target three broad themes that are both investible and aligned with the United Nations’ Sustainable Development Goals (SDGs). Stock selection is bottom-up – we choose the companies where we have the strongest conviction on their impact on SDGs and potential for financial growth, although we also consider the balance of the portfolio when making our decisions.
Social Progress: Bank Rakyat Indonesia
Bank Rakyat Indonesia is one of the largest banks in Indonesia and Southeast Asia that focuses on micro, small and medium enterprises (MSMEs) and is a pioneer of microfinance in Indonesia. A large underbanked population, positive demographics and economic growth provide secular tailwinds for banking activity in Indonesia. The bank aspires to grow its micro segment to be 55% of its total loan book by 2025.
With nearly 82% of its corporate loans going to Indonesian micro, small, and medium enterprises – and 42% of loans going to microbusinesses in particular – Bank Rakyat makes a strong contribution to SDG 8 ‘Decent Work and Economic Growth’, SDG 9 ‘Industry, Innovation and Infrastructure’ and SDG 1 ‘No Poverty’, which between them aim to expand access to financial services to underserved populations.
Energy Transition: First Solar
First Solar is a leading provider of solar modules based in the US. The company is vertically integrated and uses thin-film technology based on cadmium telluride, which differs from more common silicon-based technology. Thin-film modules are more sustainable than crystalline silicon, with significantly lower carbon and water footprints, and production is not dependent on China, which is responsible for over 80% of the world’s supply of solar modules and related materials.
First Solar’s customers are developers and operators of solar power generation systems, such as electric utilities companies, or private companies that are looking to reduce reliance on the grid and to increase the share of renewable electricity used in their operations. This contributes to SDG 7, ‘Affordable and Clean Energy’.
The company is a notable beneficiary of the US Inflation Reduction Act, which incentivises solar projects through production and investment tax credits. Its modules should also be eligible for the domestic content bonus, given they are manufactured in the US. It is seeing strong demand for its modules on the back of this and capacity is sold out through 2026.
Biodiversity: Xylem
Xylem is a leading global water technology company that provides services across various stages of the water cycle; its recent acquisition of Evoqua Water Technologies adds fast-growing water treatment services to its portfolio. The two companies are highly complementary: Evoqua is seeing strong demand for its outsourced water treatment offering in the US and Xylem’s global footprint offers international expansion potential. More broadly, the need to modernise water infrastructure and the possibility for the regulation of the treatment of ‘forever chemicals’ provide further potential positive drivers.
Xylem contributes to SDG 6 ‘Clean Water and Sanitation’, but also SDG 3 ‘Health & Wellbeing’. Its products help customers manage scarce water resources through treatment and loss prevention, reduce pollution of waterways and operate/monitor wastewater and drinking water infrastructure. These measures build resilience for communities facing the consequences of climate change by improving the management of scarce water resources and reducing sewer overflow and floodings caused by extreme weather events.
A broad strategy investing in change for the better
Creating a sustainable world requires substantial capital investment, and the social, environmental and technological challenges are complex and interconnected. AXA ACT People & Planet Equity recognises that a joined-up approach is needed. It also recognises that the demand for change is creating an opportunity for investors.
While it’s important to maintain a disciplined separation between financial outcomes and our non-financial goals, we believe that the two are ultimately intertwined. We can help to safeguard the future of the world by providing capital to companies that seek to deliver technologies and solutions addressing the biggest challenges. Simultaneously, helping investors access overarching long-term structural growth drivers that will deliver compound annual growth can ultimately help deliver attractive investment returns.
People and Planet Equity
Invest in companies making measurable positive contributions to some of the most urgent social and environmental problems.
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This marketing communication does not constitute on the part of AXA Investment Managers a solicitation or investment, legal or tax advice. This material does not contain sufficient information to support an investment decision.
Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.
Before making an investment, investors should read the relevant Prospectus and the Key Investor Information Document/scheme documents, which provide full product details including investment charges and risks. The information contained herein is not a substitute for those documents or for professional external advice.
Companies shown are for illustrative purposes only as of 30 June 2023 and may no longer be in the portfolio later. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.
The products or strategies discussed in this document may not be registered nor available in your jurisdiction. Please check the countries of registration with the asset manager, or on the web site https://www.axa-im.com/en/registration-map, where a fund registration map is available. In particular, units of the funds may not be offered, sold or delivered to U.S. Persons within the meaning of Regulation S of the U.S. Securities Act of 1933. The tax treatment relating to the holding, acquisition or disposal of shares or units in the fund depends on each investor’s tax status or treatment and may be subject to change. Any potential investor is strongly encouraged to seek advice from its own tax advisors.
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AXA ACT People & Planet Equity Fund is a part of AXA Framlington Range of Authorised Unit Trust Schemes and is managed by AXA Investment Managers UK Limited, part of the AXA IM Group.
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