Trustnet Magazine 78 November 2021 | Page 48

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? 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 /