CERTIFICATION QUARTERLY WEBINAR APRIL 2018 RIAA MEMBER ONLY WEBINAR 18 April 2018 Presenters: Tom King and Eric Siegloff - Nanuk Asset Management John Berry - Pathfjnder Asset Management Alexander Austin - Infradebt Responsible Investment Association Australasia
Nanuk New World Fund A Global Equity Strategy focused on Environmental Sustainability and Resource Efficiency April 2018
Nanuk Asset Management Wholly dedicated to investing globally in environmental sustainability & resource efficiency • A private company, formed in 2009. Initially focussed on clean energy. Now broadened. • Investment management professionals located in Sydney, New York & London • Combined industry experience: Principals & CEO 130 yrs, Investment team 48 yrs – Two strategies, each accessible as funds or via separately managed accounts • – Global Alpha Fund - a long-short absolute return global equity strategy, since June 2011 – New World Fund - a long-only global equity strategy, since November 2015 Expanded universe, Launch New World Built research Long-Short Model Launch of Clean redefined strategy Established Appoint Incorporation of Nanuk Expanded Fund (NNWF) capability and fund Portfolio, plus Energy Fund (Long- (absolute return) and presence in UK and Asset Management Investment Team CEO setup managed account Short) renamed “Global Alpha US (Long-Only) Fund” Oct 2009 Aug 2014 Nov 2015 Dec 2009 Jun 2011 Sep 2013 2015/16 Oct 2016 SQM rates NNWF Appoint Head of Australia Ratings rates Lonsec rates NNWF RIAA certifies NNWF as Register NNWF (PDS) “Superior / High “Investment Grade” Distribution NNWF “Strong” Ethical Investment Investment Grade” May 2017 Jun 2017 Aug 2017 Aug 2017 Nov 2017 Mar 2018 2
The Tailwind • Environmental challenges and resource constraints necessitate significant longer term transitions in the global economy Medium term outperformance of environmental equities vs traditional equities is evident • 450 Nanuk Index Return (AUD, 31 Mar 2018) 1 Yr 15 Yrs “Strategy” 400 FTSE EOAS 16.1% 11.3% MSCI ACWI 12.4% 7.5% 350 Outperformance 3.6% 3.8% 300 250 200 Environmental 150 Index Traditional Index 100 50 MSCI All Country World Total Return Index (AUD) FTSE Environmental Opportunities All-Share Total Return Index (AUD) NANUK New World Strategy (AUD) 0 Sources: Nanuk, Bloomberg, FTSE Russell, $A, annualised returns to 31/1/2018. The Nanuk “Strategy” performance constitutes the following: (1) Nanuk New World Fund since launch on 2 Nov 2015 , and (2) gross / pre-fee performance of the long book of the Nanuk Global Alpha Fund less an annualized expense ratio of 2.9% (from 31 Jul 2012 to 1 Nov 2015) . NB: Past 3 performance is not an indicator of future performance.
Motivations & Beliefs The current global economic model is unsustainable • climate change, water scarcity and pollution are real challenges – Large scale changes are required to business practices globally • to assist the transition to greater environmental sustainability & – resource efficiency introducing many investment opportunities and risks – Costs associated with renewable energy and more efficient industrial • processes, enabled by technology and rising demand, are falling dramatically attracting corporate capital flows – Nanuk invests in listed global companies which contribute to Ø improving resource efficiency and environmental sustainability 4
The Sustainability Revolution • Nanuk believes that a ”Sustainability Revolution” has commenced Sustainable technologies are reaching / have reached economic viability .. • surpassing and supplanting unsustainable technologies and industries in the coming decades – Agricultural Industrial Digital Sustainability Revolution Revolution Revolution Revolution 5
Nanuk New World Fund (NNWF) An Australian registered unit trust, fully invested in listed global equities • • Wholly-focused on investing in Environmental Sustainability & Resource Efficiency only invested in companies which are materially associated with ESRE (>25% of value) – The Fund employs a “core” sustainable investment approach • sustainably themed – utilises both positive & negative screening – – integrates ESG into the investment analysis & decision making process – embraces social & ethical values and norms Sectoral investment focus • Nanuk’s 8 core themes – 6
NNWF - Portfolio Sector Allocations Sector allocations access a broad range of environmental sustainability-related trends Sector Fund Weight Example Areas Of Investment LED lighting, OLED, building energy efficiency, auto energy efficiency, electrical energy efficiency, vehicle electrification Energy Efficiency 25% (EVs) Solar, wind, hydro, fuel cells, transmission and distribution, smart metering, energy storage (batteries), biofuels, Clean Energy 20% demand response Factory automation, robotics, ‘internet of things’, commercial drones, 3D printing, advanced manufacturing Industrial Efficiency 22% Waste management, waste to energy, recycling, pollution Waste & Pollution 11% control Agricultural equipment, fertilizers, chemicals, food Food & Agriculture 8% processing, forestry and forest products Sustainable materials, advanced materials, lightweight Advanced Materials 9% materials Desalination, water efficiency, waste water processing, Water 2% water supply, infrastructure Wearable devices, diagnostic technology, healthcare Healthcare Technology 3% solutions, data analytics 7 Source: Nanuk, as at 31 Mar 2018`
Company Exclusions - around three main areas 1. Climate Change, Fossils Fuels & Environment 2. Weapons 3. Ethical Values & Human Rights 8
New World Fund - Portfolio Characteristics An actively managed, unhedged, well diversified fund • higher return on capital and better value than benchmark indices – Underpinned by an investment process which is focused on • 1. identifying good quality businesses benefitting from – – 2. favourable industry trends, which are 3. not priced to reflect their value – Nanuk New World FTSE EOAS Fund (benchmark) 69 505 Number of Stocks 12.4 3.1 Median Market Cap (US$bn) 15.1 17.9 PE Ratio (FY1) 21.0% 15.7% ROE 94% / 100% Downside / Upside Capture (since inception) 9 Sources: Bloomberg, FactSet & Nanuk, as at 31 Mar 2018
Fund & Strategy Performance Robust strategy outperformance translated into fund outperformance since inception • Since Fund New World Fund Performance 3 mth 1 yr 2 yr (pa) Inception (pa) (to 31 Mar 2018, %) New World Fund Return (%) 6.5 27.8 23.2 17.1 FTSE EOAS Benchmark Return 2 (%) 0.5 17.9 18.9 12.2 Value Added (%) 6.0 9.9 4.3 4.9 MSCI ACWI Return 3 (%) 1.0 14.2 15.1 7.7 Value Added (%) 5.5 13.6 8.1 9.4 L-T Strategy Performance 1 Yr 2 Yrs 3 Yrs 4 Yrs 5 Yrs (to 31 Mar 2018, %pa) Nanuk New World 27.9 23.2 15.6 16.1 24.9 Benchmark Return 17.9 18.9 10.6 14.0 18.8 Value Added 10.0 4.3 5.0 2.1 6.1 Tracking Error 4.7 4.6 4.7 4.7 5.3 Information Ratio 2.1 0.9 1.1 0.5 1.1 Fund Performance: Notes (1) Inception date November 2, 2015 (2) Benchmark = FTSE EOAS TR $A (3) MSCI ACWI TR $A Sources: Factset, SQM, Nanuk. The Nanuk: “Strategy” performance constitutes the following: (1) Nanuk New World Fund since launch on 2 Nov 2015 , and (2) gross / pre-fee performance of 10 the long book of the Nanuk Global Alpha Fund less an annualized expense ratio of 2.9% (from 31 Jul 2012 to 1 Nov 2015) . NB: Past performance is not an indicator of future performance.
Summary • Nanuk is a specialist global equity manager – wholly-focused on investing in environmental sustainability & resource efficiency 8 years of building unique IP around sustainably-themed investing – pragmatic, ESG-aligned, responsible & sustainable investment approach – “ this is all we do” Focussed on active management • significant diversification benefits for Australian investors – rigorous investment processes coupled with a unique multi-PM model – differentiated from traditional global equity funds – attractive fundamental portfolio characteristics • “strong outperformance since inception” Experienced, dedicated and committed staff • 11
The world is Nanuk Asset Management Pty Ltd Level 8, Kyle House changing. 27-31 Macquarie Place Sydney NSW 2000 Australia Tel +61 2 9258 1600 Fax +61 2 9258 1699 Don’t get stranded. Dan Powell Head of Distribution Tel +61 2 9258 1612 Mob +61 419 914 212 Email dan.powell@nanukasset.com Eric Siegloff CEO Tel +61 2 9258 1606 Mob +61 481 751 615 Email eric.siegloff@nanukasset.com 12
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