A rotation from growth to value will take years to play out for a generation of investors that has only known low interest rates, says senior fund manager CLIVE BEAGLES
- Rotation from growth to value underway
- Corporate activity could be next trigger
- Investors slow to embrace change
A STOCKMARKET rotation from growth to value could take years to fully play out, with corporate action likely to be the next catalyst for investors, says senior fund manager Clive Beagles.
Many investors sold down high-growth stocks like big US tech firms over the past year as higher interest rates reduced the future value of their earnings.
But despite a dramatic selldown that shaved trillions from market values, investors are only at the start of a reorientation in markets that could last up to three years, believes Beagles, an UK equity income manager with our London-based sister company J O Hambro.
“There’s a generation of fund managers who have only ever lived in a world of zero interest rates and very low discount rates and it’s taking them a long time to recognise that this is a regime shift,” he says.
The gap between average valuations of US and UK-based companies is evidence of how far the changeover has left to go, he says.
UK shares are trading at an average price earnings ratio roughly half their US counterparts as the war in Ukraine overshadows a robust local economy and better-than-expected company reporting season.
“The UK has the greatest exposure to the value factor of any developed market,” he says.
Value gap may trigger corporate activity
This relative value is starting to trigger corporate activity, says Beagles.
The UAE’s First Abu Dhabi Bank is reported to have been considering an all-cash bid for banking icon Standard Chartered.
Anglo-Dutch energy giant Shell has been mulling a move to the US.
Cement and concrete producer CRH unveiled plans to move its main listing from London to New York, sending its shares up 7 per cent on the day of the announcement.
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“This could be the sort of thing that jolts investors into realising quite how ridiculous this valuation gap between the UK market and other parts of the world has become,” says Beagles.
“Standard Chartered is an interesting example. As far back as 50 years ago, it was one of jewels in the crown of the UK market — listed in London but exposed to high growth markets in Asia with a very interesting geographical footprint.
“It has been struggling for years and is now trading on about half its book value. First Abu Dhabi trades at two times book value — so you can see what they are trying to do.”
Reports of Shell considering a move to the US markets also indicate that corporate activity can be the catalyst to realise investment opportunities.
“In terms of the geographical footprint, there’s not much to choose between Britain’s BP and Shell and their US peers Exxon and Chevron.
“But the US peers trade on anywhere between 50 to 75 per cent premiums. There’s no logic to it.”
Trend to value has years to play out
Beagle says this indicates the trend towards value stocks has some years to play out.
“It is taking investors a while — the UK has been deemed to be this sort of Jurassic Park market where companies go to die for some time.
“This is why I come back to: does it need one of our banks to get bid for? Does it need one our big oil companies to get bid for?
“If you have two or three come along in quite short order that might be the thing — investors have been very slow to embrace the change.”
Beagles says the recent corporate earnings season in the UK saw a mix of solid results and muted outlook statements.
But he says better-than-expected dividends indicate that corporate Britain is in good health.
“That’s the ultimate manifestation of business confidence, isn’t it? It reflects strong balance sheets and demonstrates what companies really think about the world.
“Consumer confidence in the UK is almost at a one year high, so despite all the misery they read in the newspapers, people are just getting on with their lives.
“Retail spending has generally come in better than people would have expected, and we’ve still got this massive cushion of £270 billion in savings.
“There’s a little bit of noise about currency, with sterling rallying off its lows, and there’s a little bit of noise around interest costs for companies that are heavily levered – but overall things are looking pretty good.”
About Clive Beagles
Clive Beagles is a senior fund manager with UK-based asset manager, J O Hambro Capital Management. Clive is one of the UK’s most highly respected equity income managers. He has 32 years of industry experience and co-manages the JOHCM UK Equity Income Fund.
About Pendal Group
Pendal is a global investment management business focused on delivering superior investment returns for our clients through active management.
The British share market shows why it’s important to look past the headlines and see the world objectively, says Pendal’s Clive Beagles.
IT’S easy to forget that newspaper headlines are designed to do only one thing: sell newspapers.
If long-term investors needed a reminder of the importance of looking past the headlines, consider the UK, says Pendal’s Clive Beagles.
Recent commentary on the UK has focused on political instability, energy market disruption and the prospect of a real GDP recession in 2023.
Yet UK shares are the best-performing developed market in the world this year — and still offer strong value, healthy dividends and the prospect of growth, says Beagles, a senior fund manager at Pendal’s UK-based asset manager J O Hambro.
Consider this: the FTSE All-Share Index — a measure of the biggest 600 companies on the London Stock Exchange — trades at about the same market cap as Apple.
“It’s crackers,” says Beagles. “One is a two product company — the other is an extraordinarily diverse index in all sorts of industries.
“And yet which one have investors got more money in?”
It’s a reminder of the importance of looking through the noise in investment markets and trying to see the world objectively, he says.
UK issues milder than they appear
Many of the perceived problems facing the UK are milder than they appear, says Beagles.
The recent chaos in political leadership is likely to settle down to an era of more predictable politics, with the extremes of both sides reined in by the shambles of three Prime Ministers in two months.
“In any case, we have left the EU so we might as well try and make the best of it — many of the government’s policies about accelerating deregulation were exactly what we need to do.”
The energy crisis triggered by the Russia Ukraine war is dissipating as European governments co-operate to find alternative gas suppliers and build stockpiles.
“And obviously we can’t rely on the weather, but it’s 19° here this weekend in the middle of November. Each week that goes by like that means accumulated gas reserves are being built up for the winter.”
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Look to nominal GDP
Even the prospect of recession in 2023 is not as simple as it appears, says Beagles.
“There’s far too much focus on real GDP as opposed to nominal GDP.
“Yes, we are likely to have a real GDP recession, but it could easily be in a situation where nominal GDP is still growing by 4 or 5 per cent.
“Real GDP is an artificial construct. It doesn’t exist in the real world. Companies don’t operate in a real GDP world – their revenues and profits are denominated in nominal terms.
“Many analysts are looking at previous recessions and assuming some sort of 20 to 30 per cent earnings fall for the more cyclical parts of the market.
“But in nominal terms, revenues may well be flat or rising.
“Ultimately, equities should give you an inflation hedge.”
Misery ‘slightly overdone’
Beagles says many of the key indicators of Britain’s economic health have also settled down.
Bond yields in the UK are now lower than they were before the political instability. Sterling is trading at a similar price versus the euro to what it was five years ago.
Households have some £230 billion of accumulated savings, which will offset the effect of interest rate rises and cost of living issues.
Shares also look good value, even with the FTSE100 outperforming other developed markets and trading relatively unchanged year to date.
“The dividend yield in our fund for this year is 6 per cent. It’s only ever been higher than that very briefly during the financial crisis,” says Beagles.
“Dividend cover is the highest it’s ever been and many of the stocks in our fund are on free cash flow yields in the mid-teens or above which means there’s quite a buffer against earnings disappointments.
“It feels a bit like the misery is slightly overdone.”
About Clive Beagles
Clive Beagles is a senior fund manager with Pendal Group’s UK-based asset manager, J O Hambro Capital Management. Clive is one of the UK’s most highly respected equity income managers. He has 32 years of industry experience and co-manages the JOHCM UK Equity Income Fund.
About Pendal Group
Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.
Inflationary periods can be a good time to identify mis-priced stocks if you know what to look for, says Pendal’s CLIVE BEAGLES
- Inflation triggers mis-pricing of stocks
- Important to decipher inflation and volume in revenue growth
- Cyclical stocks oversold in UK market
HOW can equity investors identify mis-pricing in an inflationary environment — and therefore identify opportunities?
Pay attention to the difference between real growth and nominal growth rates of a company, says Clive Beagles, senior fund manager at Pendal’s UK-based asset manager J O Hambro.
Real growth measures growth adjusted for inflation. Nominal growth doesn’t adjust for price changes.
“Inflation has meant real growth forecasts have come down somewhat. But companies operate in a nominal growth rate world, and they’re still going to be high,” says Beagles.
“In the UK nominal growth could be 10 per cent — and that hasn’t happened since the 1980s.
“It’s a very different environment and people haven’t been focusing on it. Earnings could prove to be much better than people think because they are in nominal terms.”
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In all markets it’s important to look at individual companies and decipher the split of revenue growth between inflation and volume, says Beagles.
“Some companies are very helpful at providing it and some aren’t.
“If you can understand the split, you can identify companies that can pass through price rises, and those that might end up with strong revenue growth but no volume growth,” he says.
Rotation away from cyclicals and financials ‘overdone’
In the UK, the rotation away from financials and cyclicals towards defensive stocks is overdone, argues Beagles.
Extreme risk aversion in the market means the valuation between defensives and cyclicals is now at the same low level as after 9/11 and during the Lehman collapse in the global financial crisis.
“That’s pretty staggering. We are in this phony period where everyone is anticipating that life slows down quite dramatically but companies haven’t seen it yet.”
The cost-of-living crisis particularly around energy prices in the UK has gotten a huge amount of attention.
“But the stock of savings is elevated and at an aggregate level that will provide a bit of a cushion.” (Though the savings aren’t distributed evenly across society, he adds.)
“The investment community has been whipped up into very bearish sentiment, but the UK is different to Europe. It hasn’t been hit as hard by higher energy prices. It is much more service, consumer-spending oriented. It hasn’t got a big manufacturing sector.
“Share prices are assuming much worse than what we’ve seen so far.
“As risk tolerance normalises, cyclicals and financials should outperform.”
About Clive Beagles
Clive Beagles is a senior fund manager with Pendal Group’s UK-based asset manager, J O Hambro Capital Management. Clive is one of the UK’s most highly respected equity income managers. He has 32 years of industry experience and co-manages the JOHCM UK Equity Income Fund.
About Pendal Group
Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.
Despite recent volatility the fundamentals of investment in European equities haven’t changed much says Pendal Group’s Clive Beagles
- Investors in Europe must not panic.
- Long term fundamentals remain sound.
- Pricing of some stocks, due to the conflict, is irrational.
Clive Beagles has a message for investors in Europe: don’t panic.
The war in Ukraine is a human tragedy and has immediate implications for many commodities, says the senior fund manager from Pendal’s UK-based J O Hambro asset manager.
But considered long-term investment strategies remain sound.
It’s a particularly pertinent message given the rotation that had been going on since the middle of last year from large, tech-focused growth companies (often on Wall Street) to value stocks.
“For many years people wanted to invest in mega caps and growth stocks and not much else,” Beagles says. “And then late last year and into this year investors got the point of thinking about something else.”
European and UK markets, particularly banks, become attractive to what Beagles describes as “slightly lower conviction” investors. They were prepared to buy into European equities, but not with gusto.
Then came Russia’s unprovoked invasion of Ukraine and those slightly-lower-conviction investors pulled back on European and UK stocks.
Broadly, the more a stock is invested in Europe — or relies on energy, or is a bank or a consumer staple relying on customers that feel the effect of higher gas prices — the more the share prices fall have been, Beagles says.
And the reaction to perceived bad news has triggered big declines.
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“Interest rates are still going up and the fundamentals of the story haven’t really changed much. Investors need to remember that,” Beagles says.
“Going back a month, the UK and Europe were much cheaper than their US counterparts in comparable sectors. And that has been accentuated in the past few weeks.
“What’s happening is a human tragedy. In economic terms, outside some commodities like wheat and wool and coal, the main impact is on business confidence. And, of course, there’s more short-term uncertainty.
“While it’s right to think that economic growth across Europe might be 100 basis points lower, the region is still expanding.”
The pricing of some equities in Europe and the UK is now verging on the absurd, Beagles says.
He uses the example of British free-to-air television network ITV. It recently reported 24 per cent growth in revenue to a record level, a 40 per cent jump in earnings per share, and said the current year has started strongly.
It’s share price dropped 27 per cent on the day of the announcement, with investors focused on the costs associated with the acceleration of ITV’s digital transformation strategy.
“Obviously investors are concerned that future economic growth and business confidence may be materially impacted by events in Ukraine. But going through the numbers the share price drop is absurd,” Beagles says.
If you look at the UK specifically the market has a relatively high weighting to oil and mining, and commodity prices are up, Beagles points out.
“Assuming we get a couple of rate rises, many companies in Europe and the UK will get back to getting a return on equity of about 10 per cent. You’d normally expect them to be trading at least at book value, and many, such as UK banks, are not. Absurd.”
A Pendal statement on Russia’s invasion of Ukraine
During these tragic times, Pendal’s sympathy lies with the people of Ukraine in their struggle to maintain their freedom.
As responsible investors, Pendal Group and its affiliates J O Hambro Capital Management, TSW and Regnan have taken decisive steps to reduce our already minimal exposure to Russian securities.
We are limiting direct risk in client portfolios and taking decisive steps to comply with evolving sanctions and restrictions. We will refrain from investing in Russian and Belarusian securities for the foreseeable future.
The situation is evolving rapidly and we continue to monitor the emerging risks, which may take an unexpected form as the consequences ripple through the financial and economic systems.
As active managers, our purpose is to navigate our clients through a world in flux to protect their interests during uncertain times.
About Clive Beagles
Clive Beagles is a senior fund manager with Pendal Group’s UK-based asset manager, J O Hambro Capital Management. Clive is one of the UK’s most highly respected equity income managers. He has 32 years of industry experience and co-manages the JOHCM UK Equity Income Fund.
About Pendal Group
Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.
Greater employee power and digitalisation are two pandemic trends that will endure to shape the investment landscape in 2022. CLIVE BEAGLES explains
- Covid has forced many companies to catch up with digitalisation
- The best have adapted and created new opportunities
- Wage pressures will eat into some earnings in 2022
THE pandemic has breathed new life into some sectors of the economy that otherwise would have been swamped by technological change — and that could open opportunities for investors.
The pandemic forced some old-world industries to ramp up their digitalisation – the use of technology to provide new revenue and value-producing opportunities.
These enhancements will have long lasting benefits says Clive Beagles, a senior fund manager who focuses on equity income at Pendal Group’s UK-based asset manager JO Hambro Capital Management.
“There were some sectors that pre-Covid were structurally compromised, and their outlooks weren’t positive, Beagles says. “But that’s transformed during the pandemic and emerged as part of the vanguard of the recovery.
“Everyone talks about Covid accelerating ten years of change — and that’s helped some of these industries.”
Some old-economy industries will emerge from the pandemic in much stronger shape than where they started.
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“They haven’t exactly reinvented themselves, but they have reacted in a meaningful and agile way.
“Yet some of them are still being valued as if they’ll have declining profits and at some point will become terminal.”
Beagles nominates recruitment and advertising-reliant industries as sectors that will emerge from the pandemic in 2022 in better shape than when Covid hit.
Two examples in the United Kingdom are broadcaster ITV and recruiter Michael Page.
“In the case of media and particularly broadcast TV, the ability to provide much greater data on audiences and who is being reached provides the medium with a whole new selling point,” Beagles says.
“In the case of recruiters, they’ve used the pandemic time to go digital, and there’s strong demand for labour.”
Greater employee power
Another big change for firms and earnings in 2022, Beagles says, is the emergence of employee power. Because of the strong demand for labour, workers can demand more.
“It’s still some way out but it could eventually be one of the biggest changes in the past 20 years, because for the last two decades all the power has been with employers,” Beagles says.
“There will be sectors where the employees will become much more strategic. We know about medical staff but also areas which weren’t considered strategic before like HGV (heavy goods vehicles) drivers.”
Labour pressures – there’s 1.4 million people unemployed in the United Kingdom currently and 1.2 million job vacancies – will put pressure on prices, and that will eat into earnings in some sectors.
“Twenty-twenty-two is only about the second or third innings, to use a baseball analogy, of a longer change period. It has a way to go and the rotation in markets in 2022 should be quite powerful.”
About Clive Beagles
Clive Beagles is a senior fund manager with Pendal Group’s UK-based asset manager, J O Hambro Capital Management. Clive is one of the UK’s most highly respected equity income managers. He has 32 years of industry experience and co-manages the JOHCM UK Equity Income Fund.
About Pendal Group
Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.
In a world increasingly focused on Environmental, Social and Governance issues, many investment opportunities can be found among “sin stocks” working on an ESG transition. CLIVE BEAGLES explains
- Improving climate credentials provides investor opportunity
- ESG stocks alone provide a narrow universe
- Market is more nuanced in how to consider ESG
IT’S common these days for investors to look for companies that tick all the ESG boxes.
But many of the best ESG investment opportunities can be found among so-called “sin stocks” working on catching up.
ESG-related upgrades from ratings agencies are happening more often at mining and oil companies, than other sectors, observes Clive Beagles, a senior fund manager who focuses on UK equities at Pendal’s London-based asset manager J O Hambro Capital Management
“We measure the upgrades to downgrades of companies based on ESG factor. Our fund has a ratio of about four to one upgrades to downgrades. And about half of those companies being upgraded were either oil or mining companies,” Beagles says.
“You might not like the pace some of the oil and gas companies are changing, but you can’t question the fact they’re trying to change.”
When companies are changing, there’s investment opportunities.
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“When you invest you are always looking for change,” Beagles says. “You look for change in return on capital. You look for change in operating margins. You should also look for change in ESG credentials.
“If a company is improving its ESG credentials, its cost of capital is likely to go down and its ESG rating will go up,” Beagles says.
Twelve months ago investors, and in some cases management themselves, were categorising businesses around whether they met ESG benchmarks or not.
But it is much more nuanced now, Beagles says.
“I think peak ESG was about last November in terms of not investing in older style, non-ESG companies, and looking for pure play opportunities,” he says.
“ESG and climate change are real but the investment world has become a little more balanced about it. Many companies are trying to move in the ESG direction. But now it is more about trajectory of change, rather than absolute scoring.”
Beagles says there is a place for pure plays in the ESG world, and for impact funds.
“But not everyone can do that and it’s a very narrow cohort of stocks,” he says.
“A much broader approach which can be just as useful and relevant is to encourage companies to change faster. And that’s very much what we are doing.”
Beagles says the shift among investors has been quite marked.
“A year ago, clients might look a bit blankly about investing in an older style company and say ‘they still have coal’. Now they are starting to understand the transition much better.
About Clive Beagles
Clive Beagles is a senior fund manager with Pendal Group’s UK-based asset manager, J O Hambro Capital Management. Clive is one of the UK’s most highly respected equity income managers. He has 32 years of industry experience and co-manages the JOHCM UK Equity Income Fund.
About Pendal Group
Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.
What can we learn as UK stocks outperform their global peers? We asked Pendal Group’s CLIVE BEAGLES
- Post-Covid — and five years after Brexit vote — UK market is outperforming
- British economy is growing fast as economy re-opens
- Australia’s re-opening is three-to-six months behind
FEDERAL treasurer Josh Frydenberg told Sydney radio this week that the United Kingdom’s approach to re-opening was “really instructive” for Australia.
Despite a high infection rate, the British economy is growing fast and its stockmarket is out-performing its global peers.
“They’re still getting 30,000-plus cases each day, but their rate of hospitalisation has fallen by 83 per cent since the peak at the start of the year,” Frydenberg told 2GB.
“As you know, they’re not turning back — they’re living with the virus and so should we here in Australia.”
UK data supports his view.
Last week the UK’s Office for National Statistics upgraded economic growth for the June quarter from 4.8 per cent to 5.5 per cent. The International Monetary Fund and the OECD expect the UK economy to expand at a 7 per cent clip this year, and around 5 per cent next year.
The FTSE100 gained around 1 per cent over the past month while other major indices in the United States, Japan, Germany and Australia were lower.
Five years after Britain voted to leave the European Union, the threat of a post-Brexit slowdown now appears to have well and truly passed.
“Whatever the reason, the conditions are right for the UK market to outperform,” says Clive Beagles, a senior fund manager at Pendal Group’s UK-based asset manager J O Hambro Capital Management.
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What can Australian investors learn from the UK?
If Frydenberg is right, what can Australian investors glean from the UK’s re-opening experience?
“The fact that the UK is fully opened up now shows where Australia will go in three to six months,” says Sydney-based Pendal portfolio manager Tim Hext.
We’ll face similar issues such as demand outstripping supply and tighter labour — and we have similar stockmarket themes such as higher exposure to commodities and lower exposure to technology.
In the UK, “employment is the main driver of growth at the moment … the labour market is incredibly tight”, Beagles says.
Labour supply issues supply should be a shorter-term issue in Australia as borders re-open, says Hext. The UK faces a more structural challenge on that front, reckons Hext.
Beagles says “the UK is more openly talking about raising interest rates … and bond yields have gone from 75 basis points to 120.
“While there’s a short-term focus on the cost-of-living crisis because of energy prices, there’s also this huge pool of savings ready to be unleashed.”
Stockmarket themes
The UK’s economic pick-up underpins the stronger outlook for the FTSE. But several other factors that have worked against the UK market in recent years are now supporting shares.
The FTSE 100 has a heavy weighting to oil and gas and energy companies, including BP, Glencore, Anglo American and Royal Dutch Shell.
These have been less loved as support for environmental, social and governance (ESG) issues has grown. But as energy prices soar, hitting multi-year records, UK investors are again shifting into the oil and gas and coal companies, Beagles says.
The FTSE 100 gets around two-thirds of its earnings from outside the UK market, so it also depends on the global economy. But when the local economy gains momentum, sentiment for the bourse improves.
“The UK market also has a bias towards value stocks (there are relatively few technology stocks) and financials,” Beagles says.
“These can benefit from higher rates. And there’s a weighting towards commodities. Mining and oil companies tend to do well when rates are rising as inflation hedge.”
Combined it means UK equities are an attractive place to invest, he says.
“The day in the sun for the UK market might finally be coming after five years in the doghouse since the Brexit referendum.”
Australian investors will be hoping for similar as we re-open and learn to live with the virus.
About Pendal Group
Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.
Significant Features: The Pendal Global Select Fund is an actively managed portfolio of global shares.
Fund Objective: The Fund aims to provide a return (before fees, costs and taxes) that exceeds the MSCI ACWI NR Index (net dividends reinvested) in AUD over rolling 5 year periods.
Crispin is Head of Equities at Pendal, a fund manager within the broader Perpetual Group.
He joined the funds management business of BT Financial Group, now Pendal, in 1994, initially responsible for European equities and served as Head of European Equities from April 1998.
Crispin was subsequently appointed to his current role in January 2003 overseeing Pendal’s Australian equities business, one of the largest fundamental equity boutiques in the market based on team size and funds managed.
He is responsible for managing a number of our flagship Australian equity funds, which under his watch have outperformed the market over multiple periods since his appointment in 2003.
Prior to Pendal, Crispin worked for Equitable Life in London.
Crispin is a Director of the Anika Foundation and served as a Director of Football Federation of Australia from 2015-19.
He holds an Honours degree in Economics & Human Geography from Reading University.
There’ll be a lot of talk at this month’s climate change conference in Glasgow. Pendal’s MURRAY ACKMAN explains what Australian investors should pay attention to
IN TWO WEEKS world leaders — maybe even our ScoMo — will fly to Glasgow for the 26th UN Climate Change Conference of the Parties (or “COP26”).
There will be a lot of talk — but Australian investors should watch a few things closely, says Pendal Credit ESG analyst Murray Ackman.
“This is not your typical gab-fest,” says Ackman.
“The pressure on countries to act is very real as we’ve seen recently with the Morrison government’s turnaround on a 2050 emissions target.”
Murray says Aussie investors should pay attention to three things:
1. End to coal power
Coal accounts for about half of energy-related CO2 emissions and will have to be phased out to reach net zero emissions by 2050. Many are pushing for this COP to include a commitment on ending coal power.
Increasing uptake of renewables in Australia is coinciding with reduced coal use — but we still export a lot of coal.
Businesses that produce coal (eg Whitehaven), transport it (eg Aurizon) or ship it (eg Port of Newcastle) would be severely impacted by a global decision to phase out coal, Murray says.
2. Australia as a pariah
New national targets to cut greenhouse emissions by 2030 will be announced at Glasgow — as required under the Paris Agreement.
Many developed countries have already flagged stronger targets.
But Australia has been without a substantial climate policy for nearly a decade — which could start to cause problems for us, says Ackman.
“The carbon intensity of an economy may be a differentiator for future investments.
“We’ve already seen some investors avoid businesses and government bonds due to a perceived weakness in climate policy.
“They’re now known as ‘brown markets’ as opposed to ‘green markets’.
“If Australia’s national targets are not regarded as ambitious enough, this divestment trend may continue.”
3. Investment opportunities
A faster shift away from fossil fuels presents obvious challenges for Australia, since they relate to a quarter of our exports.
But change can also lead to significant opportunities.
“There is a very clear path to reduce Australia’s domestic emissions which will require substantial infrastructure investment,” says Murray.
“There will be a lot of spending on the electricity supply of the future with transmission lines, interconnectors and energy storage.
“There are also opportunities for export, whether that’s green hydrogen (produced by renewables), minerals required for electric vehicle batteries and even copper.”
About Murray Ackman and Regnan
Murray is a Senior ESG and Impact Analyst with sustainable investing leader Regnan.
He also provides fundamental credit analysis on Environmental, Social and Governance factors for Pendal’s Income and Fixed Interest team.
Murray has worked as a consultant measuring ESG for family offices and private equity firms and was a Research Fellow at the Institute for Economics and Peace where he led research on the United Nations Sustainable Development Goals.
Find out more about Regnan here
Regnan Credit Impact Trust is an investment strategy that puts capital to work for positive change.
Pendal Sustainable Australian Fixed Interest Fund is an Aussie bond fund that aims to outperform its benchmark while targeting environmental and social outcomes via a portion of its holdings.