Impax: sustainable investing returns outweigh negative flows

AUM +6% in H1-24 on strong returns. Flows disappoint but early signs of investors opening their chequebooks again.

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Impax Asset Management’s AUM was up by £2.2bn or 6% over H1-24, reaching £39.6bn on 31 Mar 24.

A very strong investment performance was the growth driver, contributing +£4.9bn (+13%) while net outflows were -£2.7bn. Impax noted:

“The outflows were overwhelmingly from a small number of intermediary clients largely representing European private wealth, and we again recorded an increase in the number of institutional clients, and no segregated mandate terminations. Following nearly two years of relative headwinds, asset owner sentiment around the transition to a more sustainable economy and associated areas of Impax expertise has improved in recent months.”

Today, my Equity Development research note covering the AUM update was published. In it, I challenge the current negative zeitgeist around sustainable investing and dig into some of the medium-to-long term structural factors which I think favour the sustainable investing space and Impax. I also highlight some of the shorter-term cyclical data points which support Impax’s comments about sentiment improving.

Some of the points covered in the note include:

• The growth trajectories of and opportunities for the companies Impax invests in (the ‘sustainable economy’) are as robust as ever e.g. in sectors such as renewable energy, energy storage, environmental services, climate change mitigation, sustainable agriculture, food, and water.

• Valuations in some of these high-growth sectors have been hard hit over the last two years and have arguably become detached from fundamentals.

• With 25 years’ track record, knowledge, and experience, Impax is among the best positioned globally (if not the best positioned) to generate superior returns from these investments.

• In Europe, the largest sustainable fund market by far (84% of global market), fund flows have remained far stronger than conventional funds, even through the last two years.

• Despite negative publicity and a weaker environment in the US, there are still pockets of strength such as sustainable bond funds and climate funds, and a far more favourable environment in East and West coast states (e.g. New York and California) with huge capital markets.

• Recent fund flow data suggests ‘green shoots’ are emerging for flows into sustainable funds, equity funds more generally, and actively managed funds. 

Read the full research note here.

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Disclosure: At the time of writing, Paul Bryant was a shareholder of Impax Asset Management, and covered Impax Asset Management as an analyst on behalf of Equity Development Limited. Read Equity Development’s research on Impax Asset Management here. (Please read this link for the terms and conditions of reading Equity Development’s research).

Please read TheInvestors.blog disclaimer here.