Efficient air conditioning
themes trustnet . com
Efficient air conditioning
While Illingworth has lost faith with Ørsted , the move to a low-carbon world remains a key theme in his portfolio . People often picture solar and wind farms when thinking about environmental preservation , but just as important as producing energy sustainably is using it more efficiently . With this in mind , Illingworth holds Trane and Daikin , which are both seeing increased orders for their modern air conditioning systems . “ A quarter of the world ’ s total carbon emissions come from heating and cooling buildings and transporting refrigerated goods ,” he says .
“ Trane has the target of reducing one gigaton of carbon emissions from its customers ’ footprint by 2030 – the equivalent of the combined annual emissions of the UK , Italy and France . With regulatory pressure to reduce the energy demands of this infrastructure , this should be a profitable space for those with the best technology .” The manager adds that this is an example of why the best investments are not necessarily the most obvious : “ If you identify a theme but struggle to find companies of sufficient quality with which to populate it , don ’ t let your standards slip – wait .”
/ 25 /
SECTOR PROFILE
/ 48 /
Ryan Hughes, head of investment
research at AJ Bell, says that the
direction of inflows suggests
international investors’ reappraisal of
the UK is already well under way.
“Recent months have seen a swathe
of M&A activity, with UK companies
being snapped up as investors
recognise the relative undervaluation
compared with other parts of the
world,” he says.
“This should give investors
confidence that there are great
UK companies out there, but it’s
Performance of indices over 5yrs
S&P 500 (92.9%)
MSCI World (82.7%)
FTSE All Share (31.4%)
100%
80%
60%
40%
20%
0%
o
-20%
It would be fair to say that
the vote to leave the EU in
2016 hasn’t exactly made the
UK the poster child of global
equities.
The uncertainty created by Brexit
led investors to turn their backs
on the region in favour of more
global alternatives, both to add
diversification and to gain exposure to
the dominant theme of the age: tech.
A quick look at the performance
stats suggests this wasn’t an unwise
decision. While the S&P 500 and
MSCI World indices are up 92.9 and
82.7% respectively over the past half a
decade, the FTSE All Share has made
just 31.4%.
But with Brexit finally “done”, and
the UK looking relatively undervalued
compared with the rest of the world, is
now the time for investors to tilt back
towards the domestic market? Or has
confusion over the departure from the
EU masked deeper problems?
trustnet.com
important to understand the inherent
biases in the index.”
While it was hoped the departure
from the EU would give the UK the
certainty it had long craved, the global
pandemic has confused matters.
Headlines in the past few months have
been dominated by crisis after crisis
for the UK, whether it is the spike
in gas prices or the petrol shortage.
While some investors may worry this
is just the start of Brexit disruption
predicted by the “Remain” camp,
Square Mile Investment Consulting
& Research’s head of research John
Follow the money
Homesickness
IA UK All Companies
Monaghan warns against drawing
simplistic conclusions about
extremely complicated issues.
“It is generally accepted that a
number of companies had suspended
capital expenditure owing to the
uncertainty of Brexit, but are now
looking to press ahead with these now
that the economy is re-opening after
the Covid-related lockdowns,” he says.
“Wage inflation, which in some
sectors could be attributed to a lack
of overseas labour, is by and large
considered to be transitory and as
travel routes re-open, work forces
in the construction and hospitality
areas, for example, are likely to be
replenished by migrant workers.”
For Ben Yearsley, director at Fairview
Investing, the UK was appropriately
priced for the Brexit risks at the time.
He argues the energy crisis and the
Covid pandemic have been global
events that have affected every
country.
“You just have to look at the amount
of M&A to see that bargains are still to
be found in the UK,” he says. “I think
Brexit risks had been sensibly priced
in in the period from 2016 to 2020, but
we have now moved on from that.”
Source: FE Analytics
/ 49 /