Interim Management Statement

RNS Number : 9166N

Jupiter Green Investment Trust Plc

31 July 2014

 



Jupiter Green Investment Trust PLC

Interim Management Statement for the three months to 30 June 2014

The Board of Jupiter Green Investment Trust PLC (the 'Company') is pleased to announce its interim management statement for the three months ended 30 June 2014. 

Performance Review

For the three months ended 30 June 2014 the total return for the Company was -0.4% compared to a return of 0.3% for the Company's benchmark index, the MSCI World Small Cap Index.*

*Source: Jupiter Asset Management.

Investment Manager's Report

Market Review

Global markets rose in the second quarter of 2014, however, US equities were held back by weak economic data in the first half of the quarter. This was partly due to adverse weather conditions experienced in the last quarter of 2013 and at the beginning of 2014. US markets picked up in May after better-than-expected corporate earnings. There was much focus on Europe, where weak eurozone GDP data reinforced fears that the European Central Bank ('ECB') was failing to combat deflation. Emerging markets recovered somewhat, although Chinese equities remained relatively flat. Japanese stocks also recovered, especially in the second half of the quarter, when the consensus seemed to be that April's consumption tax increase had not impeded demand to the level many had feared. As a general observation, companies that missed guidance were punished by the market and there was a notable rotation out of small and mid-cap stocks in favour of larger counterparts.

From a policy perspective, governments in the US and China both released plans to tackle carbon emissions in their respective countries. The Obama administration revealed an ambitious plan for a 30% cut in carbon dioxide emissions from power plants from 2005 levels by 2030. China announced plans to set a cap for carbon emission from 2016 as part of its next five year plan.

Portfolio Review.

As a result of the portfolio being underweight in the US and overweight in UK small/mid-cap stocks, performance was held back in relative terms and it was a lacklustre quarter for the Company.

The poor performance of our US organic food holdings, which have been solid performers for the portfolio in the past few years, also proved an impediment. Whole Foods Market ('WFM') lost ground after a profit warning. The company stated it would invest into price (i.e. cut prices), a move likely to have a short term impact on margins which are coming under pressure from increased competition from traditional stores. Nevertheless, we believe the stock was delivered quite a tough blow although we recognise that a perceived change of strategy has worried some investors. United Natural Foods ('UNF') lost ground on the back of this news. Being a distributor of organic foods, UNF is quite a different proposition to WFN and should benefit from the pick-up in sales through mainstream stores. General market noise was also an impediment: Pall Corp drifted lower with no change in fundamentals, while FirstGroup lost ground on concern about the possible impact of a strong sterling on its overseas earnings.

The reporting season at the start of the quarter was encouraging. Novozymes revealed a solid improvement in margins. Clean Harbours (recycled oil) announced solid results, while Covanta Holdings unveiled a dividend increase. Other highlights included Vestas Wind Systems, which benefited from an expanding order book, and Abengoa. The latter added value with the market starting to appreciate the value of its spin-off business Abengoa Yield, an investment company that is building a portfolio of energy assets in North and South America and Spain.     

Outlook

Stock market activity has slowed considerably during the seasonal summer lull and we are monitoring conditions closely for buying opportunities. Nevertheless, we remain mindful of heightened political risk in Iraq and elsewhere in the world and its potential impact on markets.

Inspired by recent announcements from both the US and China on emissions targets, in our view momentum behind the idea of a unified response to climate change and other global environmental challenges is gaining traction. In the US, the bipartisan group Risky Business which includes former New York mayor Michael Bloomberg and former US Treasury secretary Hank Paulson, released a report entitled "Risky Business: The Economic Risks of Climate Change in the United States." The report is aimed at increasing the responsiveness of US businesses to climate change risk and has added weight to President Obama's carbon reduction plans. Meanwhile, the Australian Prime Minister, Tony Abbot, is finding it difficult to unpick climate legislation after meeting resistance from mining magnate Clive Palmer. 

Charles Thomas

Jupiter Asset Management Limited

Investment Adviser

30 June 2014

Total Assets as at 30 June 2014: £37,313,530

Shares in Issue

Shares bought back in the period	1,273,613
Share in issue as at 30 June 2014	33,633,056
Shares held in Treasury at 30 June 2014	7,797,547
Total Voting Rights as at 30 June 2014	25,835,509

	Net Asset Value (p)	Market Price (p)
Ordinary (undiluted) excluding income/expenses	144.43	141.00
Ordinary (undiluted) including income/expenses	143.67	141.00

Portfolio Distribution as at 30 June 2014

	%
United Kingdom	24
North America	42
Europe	20
Japan	9
Other	4
Cash and fixed interest	1
	100

The Company's exposure to other UK listed investment companies was nil as at 30 June 2014.

Top Ten Holdings as at 30 June 2014

Company	Country of Listing	Activity	% of Total Assets
Wabtec	United States	Infrastructure	4.0
Cranswick	United Kingdom	Demographics	3.7
Stantec Inc	Canada	Infrastructure	3.3
Novozymes A/S	Denmark	Demographics	3.0
Ricardo	United Kingdom	Resource Efficiency	2.9
Smith A 0. Corp	United States	Resource Efficiency	2.7
RPS Group	United Kingdom	Infrastructure	2.5
Horsehead Holding	United States	Resource Efficiency	2.5
LKQ	United States	Resource Efficiency	2.4
Valmont Industries	United States	Infrastructure	2.3
			29.3

Comparative Performance to 30 June 2014

	Three months %	One year %	Five years %
MSCI World Small Cap Index (total return)	0.3	11.5	112.6
Ordinary Share NAV*	(0.4)	15.4	66.8
Ordinary Share NAV with dividends added back	(0.4)	16.3	69.4
Ordinary Share Price	(0.5)	23.7	84.3
Ordinary Share Price with dividends added back	(0.5)	24.7	87.2

* Performance adjusted for share issue/cancellation since launch

Material Events

Since the end of the period no shares have been bought back by the Company.

There were no other material events or transactions that have impacted on the financial position of the Company during the period.

The Company's Investment Objective

The Company's investment objective is to generate long-term capital growth through a diverse portfolio of companies providing environmental solutions.

The Company's Investment Policy

Asset Allocation

The Company invests globally in companies which have a significant focus on environmental solutions. Specifically, the Company looks to invest across three key areas: infrastructure, resource efficiency and demographics.

The Company's portfolio has a bias towards small and medium capitalisation companies. It invests primarily in securities which are quoted, listed or traded on a recognised exchange.  However, up to 5 per cent. of the Company's Total Assets (at the time of such investment) may be invested in unlisted securities.

The individual portfolio manager selects each stock on its individual merits as an investment rather than replicating the relevant company's weighting within the Company's benchmark indices.  The Company's investment portfolio is therefore unlikely to represent the constituents of its benchmark indices, but instead is intended to offer a well-diversified investment strategy focused on maximising returns from the prevailing economic background.

The individual portfolio manager may enter into contracts for differences in order to gain both long and short exposure for the Company to indices, sectors, baskets or individual securities for both investment purposes and for hedging or efficient portfolio management purposes. The ability to maintain a portfolio of both long and short positions provides the flexibility to hedge against periods of falling markets, to reduce the risk of absolute loss at portfolio level and to reduce the volatility of portfolio returns. The portfolio manager may also invest in single stock, sector and equity index futures and options.

Risk is also mitigated by investing mainly in quoted companies on registered exchanges, ensuring full regulatory compliance for all underlying quoted investments. There are no specific stock and sector size limitations within the portfolio, but the manager is expected to provide sufficient stock, sector and geographic diversification to ensure an appropriate trade-off between risk and return within the portfolio. In order to ensure compliance with this objective there is a two tier monitoring system. Firstly, the manager's portfolio is assessed monthly by the Jupiter Asset Management Limited Performance Committee, which is headed by the Chief Executive of Jupiter Asset Management Limited. Secondly, the Board is provided with a detailed analysis of stock, sector and geographic exposures at the Company's regular Board meetings.

Risk Diversification

The following investment restrictions are observed:

·      no more than 15 per cent. of the Total Assets of the Company (before deducting borrowed money) is lent to or invested in any one company or group (including loans to or shares in the Company's own subsidiaries) at the time the investment or loan is made.  For this purpose any existing holding in the company or group concerned is aggregated with the proposed investment;

·      distributable income is principally derived from investments.  Neither the Company nor any subsidiary conducts a trading activity which is significant in the context of the group as a whole;

·      not more than 10 per cent., in aggregate,  of the value of the Total Assets of the Company (before deducting borrowed money) is invested in other investment companies (including investment trusts) listed on the Official List.  Whilst the requirements of the UK Listing Authority permit the Company to invest up to this 10 per cent. limit, it is the Directors' current intention that the Company invests not more than 5 per cent., in aggregate, of the value of the Total Assets of the Company (before deducting borrowed money) in such other investment companies; and

·      the Company at all times invests and manages its assets in a way which is consistent with its object of spreading investment risk.

Gearing

The Company may utilise gearing, at the Directors' discretion, for the purpose of financing the Company's portfolio and enhancing Shareholders returns.  In particular, the Company may be geared by bank borrowings which will rank in priority to the Ordinary Shares for repayment on a winding up or other return of capital. 

The Articles provide that, without the sanction of the Company in general meeting, the Company may not incur borrowings above a limit of 25 per cent. of the Company's Total Assets at the time of drawdown of the relevant borrowings.  No credit facility has been negotiated by the Company to date.

The level of any gearing of the Company's Total Assets from time to time will be disclosed in the monthly factsheets which are available from www.jupiteronline.com/Green and on request from the Company Secretary.

In accordance with the requirements of the UK Listing Authority, any material changes in the principal investment policies and restrictions (as set out above) of the Company will only be made with the approval of Shareholders by ordinary resolution.

Company Information

Year end:	31 March
Results:	Final results to 31 March 2014 were announced on 23 June 2014.

Monthly fact sheets for the Company are available for download from www.jupiteronline.com/Green

The Company's Ordinary shares are listed on the London Stock Exchange and the prices are published in the Financial Times under `Investment Companies'.

The Net Asset Values of the Company's Ordinary shares are calculated daily and can be viewed on the London Stock Exchange website at www.londonstockexchange.com (under the heading 'Market News').

For further information, please contact:

Richard Pavry

Head of Investment Trusts

Jupiter Asset Management Limited

[e-mail]   020 7314 4822

The Company's Registered office is at 1 Grosvenor Place, London SW1X 7JJ.

This interim management statement has been prepared solely to provide information to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules.

By order of the Board

Jupiter Asset Management Limited

Company Secretary

31 July 2014

 

END

 

 

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