As long-term investors, Hyperion Asset Management believes that companies which undertake activities harmful to the environment and the broader community will experience increased cost pressures and lower profitability over time.
Investing in these sorts of companies is therefore not only bad global citizenship but bad for capital growth.
For these reasons, our investing style favours low capital-intensive businesses and, in some circumstances, we will entirely exclude a particular company from consideration if its activities are harmful to the environment or society, regardless of other circumstances like current valuation.
Our portfolios have a significantly lower-weighted average carbon emission score than their respective benchmarks and yet all three funds have proven outperformance track records over the long term:- consider the Hyperion Global Growth Companies Fund which returned 46% after fees in 2020, compared to the 5.7% benchmark return.
Hyperion Asset Management’s MD and CIO, Mark Arnold, and Deputy CIO, Jason Orthman, discussed how they think about sustainable investing, the forces at play which they believe will only continue to increase in importance for successful investing, and the opportunities they see likely to deliver strong returns.
Key points:
- Identifying sustainability from greenwashing
- Why sustainable companies are more profitable
- The past is catching up with companies… what would be the impact of no externalised costs and compensation for historical damage to the environment?
- The future of sustainable investing
- What economic headwinds are impacting businesses globally
- Which industries and markets Hyperion Asset Management expects to suffer in this “new world”
- How high quality companies can be a hedge against market declines
- Where the “smart money” is going in a future that is setting up to be a winner-takes-all market
- Where the investment team sees solid opportunities over the next five to 10 years.
You can download the accompanying slides here and transcript here.
The information in this document was prepared by Hyperion Asset Management Limited “Hyperion”, (ABN 80 080 135 897 AFSL 238380) of Pinnacle Investment Management Limited AFSL 322140 for the specific wholesale investor it is addressed to. The information is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. Hyperion believes the information contained in this communication is reliable, however, no warranty is given as to its accuracy and persons relying on this information do so at their own risk. Past performance is not an indicator or guarantee of future performance. This document is provided to the recipient only and must not be copied or passed on to any other person without the consent of Hyperion.
