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April 2008 |
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Dear Reader
Market Volume of Sustainability Investments Soars 67 Percent
Sustainability investments are still booming in Switzerland. In 2007 the market volume of sustainably managed assets rose 67% to CHF 30 billion. The volume of sustainable investment funds and other collective investments increased by as much as 92%, while the market as a whole contracted slightly over the same period. The main growth drivers included new products under the investment themes of water, renewable energies and climate change. According to a survey of the biggest providers, including SAM as the Swiss market leader, private investors accounted for 53% of the total volume, outstripping institutional investors for the first time. Equities are still the most important asset class, accounting for 83% of the total market volume.
As always, we hope you enjoy reading our latest newsletter.
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Report: Sustainable Investments in Switzerland 2007 |
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Best wishes
SAM
Sustainable Asset Management
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Monthly Update |
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Sustainable Performance Group (SPG) |
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The mood on equity markets remained subdued in March because of the ongoing financial crisis. The SPG share price fell by 5.0%. This was still an outperformance of 1% versus the benchmark MSCI World ex Financials, which dropped 6.0%. The positive performance was mainly the result of a rebound in solar and wind energy shares.
According to its recently published annual report, SPG managed to achieve a growth of 17.7% in 2007, despite a very difficult market environment, which equates to an outperformance of around 10% compared with the benchmark index, MSCI World ex Financials. The highlights of the past financial year included the successful capital increase, which is a reflection of investors’ keen interest in SPG’s investment strategy. |
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SAM Sustainable Water Fund |
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During March global equity markets once again lost significant ground due to persistent problems in the financial services sector. The SAM Sustainable Water Fund also retreated 6.6%. Industrial companies especially, such as ITT Corporation, Pall, Nalco and Veolia Environnement, showed signs of weakness. |
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SAM Smart Energy Fund |
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With markets very much on edge and the US dollar still in the doldrums, commodity and oil prices continued to soar. The SAM Smart Energy Fund eased slightly, falling 1.4% in March but still beating the benchmark MSCI World (-5.1%). Shares in solar energy companies showed the first signs of recovery, supported by new solid fundamental data for the industry. Some of the shares in this segment have seen sharp price increases, while stocks in the natural gas segment have moved sideways. |
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SAM Smart Materials Fund |
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Market volatility remained high during the reporting period, with the underlying mood very subdued. The rally in commodity markets continued. This resulted in a negative price trend which inevitably affected the performance of the SAM Smart Materials Fund as well. The fund retreated 5.1% during March, tracking the benchmark MSCI World, which experienced a similar loss. The favourable outlook provided by the German company SGL Carbon made a positive contribution, as did the UK waste disposal group Shanks. By contrast, the number of commodity producers, including Agrium and Rio Tinto, gave a disappointing performance. |
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SAM Sustainable Climate Fund |
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The market turbulence also affected the SAM Sustainable Climate Fund in March, with a negative monthly performance of -1.6%. The benchmark MSCI World fared much worse, dipping 5.1% over the same period. Industrial stocks helped to underpin the portfolio, supported by solid macro data. The Swedish company Munters and the US conglomerate General Electric performed especially well. The German industrial group Siemens was rather disappointing, on the other hand. Many stocks are attractively valued at present. |
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SAM Sustainable Healthy Living Fund |
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The mood was still tense on international financial markets in March. The crisis in the banking sector and poor data on the US economy had a negative impact on stock market sentiment. The SAM Sustainable Healthy Living Fund shed 4.9% in March, compared with a decline of 5.1% in the benchmark index MCSI World. One of the best performers in the portfolio was Nike. The shares of this producer of sports goods rose sharply after it reported excellent results, driven by strong demand from Asia. Over the course of the year Nike’s business should also benefit from two major sports events: Euro 2008 and the Olympics. Atrium Innovation, Crocs and Usana all saw their share price fall. |
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SAM Sustainable Global Equity Fund |
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During March global equity markets were overshadowed by the US subprime crisis and the related fears of recession. Compared with the MSCI World, the SAM Sustainable Global Equity Fund performed relatively well, despite everything. The fund’s performance was -4.8%, compared with a 5.1% fall in the benchmark. Financial stocks made the most positive contribution to performance. These included Dexia, BNP Paribas and ING Group. On the other hand, healthcare stocks such as UnitedHealth Group and Aetna had a negative impact on performance. |
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SAM Sustainable European Equity Fund |
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European equity markets were still jittery during March. The bailout of the investment bank Bear Stearns and poor US economic data drove down share prices worldwide, prompting not just the European Central Bank (ECB) but other major central banks to pump more liquidity into financial markets. The SAM Sustainable European Equity Fund followed the general trend, easing back 3.0% during March. The MSCI Europe fell 3.8% over the same period. Financials provided the biggest contribution to performance: stocks such as Banco Santander, Allianz, BNP and Dexia all recorded significant price gains. Nokia’s shares were downgraded however, after its direct rival Motorola announced weak results and a subdued outlook. |
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SAM Sustainable Leaders Fund |
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The fragile mood of stock markets showed little sign of improving during March. Uncertainties regarding the future direction of the economy and the possibility of further significant write-downs in the financial sector weighed heavily on equity markets. The SAM Sustainable Leader Fund could not escape the general trend and retreated 4.8% during March, while the benchmark MSCI World dropped 5.1%. The staffing agency Randstad performed well, after strong Q407 results helped it to buck the general trend. Volkswagen’s shares also rose sharply in response to excellent business figures and an upbeat outlook. |
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SAM Sustainable Enhanced Europe Fund |
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With the global economy showing signs of faltering, stock markets remained on tenterhooks during March. Given the general environment, the SAM Sustainable Enhanced Europe Fund shed 4.0% in March, while the benchmark MSCI Europe fell 3.8%. Volkswagen made a remarkably strong contribution to performance. The share price of the German car manufacturer rose sharply once again. Iberia Airlines also performed well after British Airways increased its stake in the Spanish airline to 13.5%. |
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Sustainability Trends |
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Nestlé Boss Criticises the Use of Water for Growing Biofuel Crops |
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Nestlé's CEO Peter Brabeck has condemned the use of state subsidies for growing biofuel crops such as soya beans and wheat. Over 100,000,000 tonnes of grain are expected to be used this year in America alone to produce biofuel. This will lead to a shortfall in the amount of grain available for food production. Simply because water does not cost anything, we are currently using around 4000 litres to produce one litre of biodiesel, warns the boss of the world’s biggest food company. |
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UN Appeal on World Water Day |
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According to UN statistics, over one billion people have little or no access to clean drinking water. In addition, another 2.6 billion people – more than 40% of the world’s population – live without adequate sanitation. Even the poorest people in the world should finally have access to clean water following an appeal launched by UNICEF to mark the World Water Day 2008. Every year 1.5 million children below the age of five die from the effects of diarrhoea because they have drunk contaminated water. The UN has set a goal of halving the number of people without access to clean water and sanitation by the year 2015. Annual investments of USD 11.3 billion are needed to achieve this. |
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Swiss are the World’s Biggest Consumers of Sustainable Products |
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Sales of organic products are the highest in the world in Switzerland, where consumers spend around CHF 170 or EUR 105 every year on average. According to the “Consumer Report Switzerland” published by the World Wildlife Fund (WWF) and the Center for Corporate Responsibility and Sustainability (CCRS) of the University of Zurich, sustainable products are booming in every area. But the report also warns that excessive consumption is cancelling out the positive environmental effects. The biggest growth rates in recent years have been recorded in sales of fruit, vegetables and eggs, and as well as hybrid vehicles and sustainable investments. |
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Low CO2 Emissions Benefit Company Share Prices |
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The share price of companies that have a particularly attractive relationship between CO2 emissions and sales, and which also have especially ambitious goals for reducing future carbon emissions, tend to be 20% higher than other companies on average. The "Carbon Winners Equity Index" published by the management consultants Arthur D. Little shows that the shares of companies with an exemplary track record on emissions tend to outperform. The study looks at companies with a stock market value of more than EUR 1 billion. |
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Lawsuit for Failure to Limit Emissions |
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18 US states want to force the government in Washington to uphold environmental protection measures. They have filed a lawsuit against the US Environmental Protection Agency (EPA) for failing to issue limits on greenhouse gas emissions despite having the power to do so. Exactly one year ago, the US Supreme Court ruled that the EPA – despite its stance up to then – definitely has the power, under the Clean Air Act, to limit greenhouse gas emissions such as CO2. In addition to the 18 US states, numerous environmental groups have signed the suit. |
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Selected Company News |
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Boeing’s Hydrogen-Powered Plane Takes Off |
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The US aircraft manufacturer Boeing has successfully tested a small plane powered by a hydrogen fuel cell. The two-seater plane weighing 800 kg has completed three test flights over an airfield near Madrid. This is the first manned flight in aviation history of a plane powered by hydrogen. The on-board fuel cell converts hydrogen into electricity and heat without producing any harmful carbon dioxide emissions. |
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Clean Light for Dark Villages |
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Lamps powered by solar energy are set to replace kerosene lamps, which are damaging to human health and the environment, in developing countries. Osram, a manufacturer of light bulbs which is part of the Siemens Group, has launched a pilot project for providing light without the need for mains power near Lake Victoria in Kenya. At a specially constructed solar station the local people can recharge batteries for energy-saving lamps, luminaires and other electrical appliances, such as mobile phones, at low cost and without damaging the environment. Off-grid solutions are the way forward for developing and emerging countries that cannot afford to set up a permanent power supply network. Around Lake Victoria alone there are approximately 30 million people who do not have access to a permanent power supply. |
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Legal disclaimer |
SAM - Member of Robeco |
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Contact
SAM Sustainable Asset Management AG
Seefeldstrasse 215 · CH-8008 Zürich · Schweiz
Tel. +41 44 397 10 11 · Fax +41 44 397 10 80
info@sam-group.com
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www.sam-group.com
Copyright © 2007
SAM Sustainable Asset Management AG. All rights reserved. |
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