During the year the portfolio found attractive investment opportunities across a wide variety of companies and industries from Lithium & Copper to Insurance Broking, Agriculture and Pathology testing. Being underweight expensive Tech and Healthcare names also contributed to relative performance.
While the market worried about slowing macro growth and stagflation during the year we remained focused on the prospects for individual companies with strong fundamentals, robust ESG credentials and we maintained our strong valuation discipline. This saw the Fund benefit from carrying large overweight positions in companies whose prospects were improving from a cyclical low point or where our profit forecasts were ahead of market expectations.
At the same time we avoided stocks with expensive valuations (namely Tech and Healthcare) or a low prospect of making a profit, the latter being the hardest hit in terms of their share prices in recent months. Detractors from portfolio performance included TPG Telecom (where the proposed merger benefits are manifesting slower than anticipated), IAG Limited (where natural perils and accident frequency continue to be worse than expected) and Platinum Asset Management (where performance has not delivered in this stage of the cycle and flows have not improved despite a major competitor experiencing a tough period).
Download the report for information on key stock selections and our ESG priorities for 2022
Ethical Partners are pleased to see Australia take the next steps to implement mandatory climate reporting with the release of draft climate standards, which we provided feedback on.
Ethical Partners have continuously called for the provision of high quality, comparable data on company’s climate governance and carbon metrics, which we believe is imperative for investors to fulfil the potential of responsible investment.
Ethical Partners have been proud to have been active supporters of the TNFD Forum over the past few years, and to provide regular feedback on the development of the official TNFD recommendations, which were launched in December, as well as to be active members of the RIAA Natural Capital Working Group.