Ravenscroft Global Solutions – One year on
There is no doubt that 2022 was one of the most challenging investing environments on record. Having launched Ravenscroft Global Solutions two weeks after Russia invaded Ukraine, the year that followed brought a lot of volatility and waves of negative market news.
It was a great test for the strategy, which had been carefully constructed so that each underlying fund selected had a role to play and could contribute something different to the portfolio.
We are pleased to say that the funds have behaved as we expected they would. In Q2 2022 Global Solutions delivered a return of -7.2%, outperforming the MSCI ACWI by 1.2%. This was followed by 2.3% fund return vs 1.5% MSCI ACWI for Q3 and 1.2% return for Q4.
Highlights from the past year
As we celebrate the fund’s one-year anniversary, we thought it was the perfect time to highlight some of the top performers within the fund's five core themes.
With three billion more middle-class consumers expected by 2030, pressure on the world’s finite natural resources will intensify, leading to scarcity challenges. More people increases the demand for energy, water, healthcare, food and materials, which creates challenges globally. This presents investment opportunities and forms the basis of Global Solutions, which invests in businesses aiming to help solve some of the world’s greatest challenges in areas such as environmental solutions, emerging equality, basic needs, energy transition and resource scarcity.
Protecting the environment is now a priority for consumers, companies and governments. There are companies finding solutions to environmental issues. Ninety One Global Environment is a fund focused on the decades-long trend towards a decarbonised economy. It invests in companies that have a long-term structural growth bias with strong competitive advantages in the clean economy space.
Many in emerging markets are looking for efficient, affordable and accessible energy in order to improve their lives as well as access to basic needs like food, water and waste management systems. Since launch, emerging markets have broadly declined, however, our fund selection in this space has, pleasingly, outperformed the MSCI Emerging Market Index. Aikya Global Emerging Markets was the top performer due to its defensive underlying exposure in sectors like consumer staples and healthcare. The fund seeks to generate healthy long-term returns with strong downside protection, this is achieved through investing in high-quality companies in emerging markets when they are available at sensible valuations.
We believe that everyone should have access to clean water, education, nutrition, healthcare and an efficient waste management system. Candriam Oncology is just one of the funds helping to address this. The world is getting older and with age unfortunately comes the increased risk of ill health. The fund provides us with an opportunity to invest in the fight against cancer, which is the number two cause of death worldwide. Using well-researched investments in a global range of companies, the fund strives for a broad advance in the diagnosis and treatment of all cancer types.
Getting to a low-carbon economy is a massive task and will require massive investment across the energy value chain if we are to achieve our climate targets by 2050. We have three funds that give us exposure to this theme. Our top-performing fund was Schroder Global Energy Transition, which was the focus of our Global Solutions presentation last year. The fund aims to provide capital growth by investing in companies that the manager believes are associated with the global transition towards lower carbon sources of energy.
For us this theme is all about getting more out of less in a resource-strained world as our population grows. We own Robeco Smart Materials in this space, which we are pleased to see has outperformed the MSCI World over the past year. The fund invests in technologies, products or services relating to the extraction, transformation or efficient processing of innovative materials, technologies enabling more automation and efficiency in industrial manufacturing as well as the recycling and reuse of materials. The fund invests in companies that will continue to enable sustainable economic growth going forward.
What’s next for Global Solutions?
There have been no changes to the fund since launch, but we are looking at a possible change that would increase our European exposure. The fund’s main geographical exposure is the US, due to the vast number of opportunities there, but over time we expected this to change as new businesses and funds launch or come onto our radar. More European exposure will help us create a more balanced portfolio in terms of regional exposure and adds something new in terms of underlying companies and more value-tilted investments.
In what has been a bumpy 12 months for the markets, the portfolio has behaved well and given us a smoother journey than many peers. We are pleased with fund performance and look forward to keeping you updated along the journey. To those who have been a part of this journey, thank you for your support. As ever, if you have any questions please do not hesitate to get in touch.
To find out more about the Ravenscroft Global Solutions Fund and for full performance data since launch, please click here.
Please note that Global Solutions is an offshore fund only available in the Channel Islands and Isle of Man.