HEAD-TO-HEAD: Ninety One versus Pictet

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Investment approach

Both funds have very different investment philosophies with the Ninety One fund targeting companies that are contributing to the decarbonisation of the economy. In addition, companies must generate at least half of their revenues from three sectors: renewable energy, efficient use of resources and electrification.

In contrast, the Pictet fund’s investment approach is based on the planetary boundaries framework, which was first developed by scientist Johan Rockstrom, and any companies it invests in must operate within a safe zone in relation to nine environmental challenges such as climate change, freshwater use and biodiversity.

McDermott notes that the managers specifically target companies where a minimum of 20% of their activities are from solving environmental challenges, although the aggregate focus across the portfolio is closer to 65%.

Fundamental analysis is then undertaken on potential stocks. Once initial screening is undertaken on around 3,500 companies, around 400 qualify for further screening and a final list of 200 stocks with the best risk-return profile is then drawn up for further analysis. Overall the Pictet fund invests in about 50 stocks.

In contrast, the Ninety One fund invests in fewer having around 20 to 40 holdings at any one time. Initially, the managers filter out the number of companies to around 700 and then an analyst team conducts a quantitative evaluation, which whittles the number down to around 100 to 150 that are subject to a full fundamental analysis.

Unusually, the Ninety One fund is relatively underweight the US with 47.6% of its portfolio invested there compared with 71% for Pictet. McDermott attributes this to the fact that FAANG stocks typically do not pass the carbon avoidance screen. In contrast, it is overweight China at 13.7%, which he attributes to the number of innovative companies located there.

Meanwhile, for the Pictet fund, as well as having a large exposure to the US, it has little to no exposure to emerging markets with France, Japan, Germany and Switzerland rounding out the top five for country exposure.

Fund characteristics

Sector allocation:

Source: Fund factsheets, November 2022

Country allocation:

Source: Fund factsheets, November 2022

Top 5 holdings:

Source: Fund factsheets, November 2022

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