ii ACE 40 performance review: Q2 2024
Here’s how interactive investor’s sustainable funds performed in the three months to the end of June.
11th July 2024 12:42
Over Q2 2024 the performance of funds on the ACE 40 list was particularly influenced by exposure to Asia and alternative energy.
Pacific Assets Ord (LSE:PAC) topped the outperformers’ list this quarter with a share price return of 9.1% and strong net asset value (NAV) performance of 8.6%. The investment approach focuses on sustainable growth stocks with higher-quality elements, particularly regarding management teams, and this can result in the fund showing differentiated returns in the short term.
One feature of the fund over recent years has been the overweight to India, and the outperformance of that market provided a boost to returns here and helped the fund outperform the MSCI AC Asia ex Japan Index in NAV terms.
- Discover: What is a Managed ISA? | Sustainable Investment Funds | Ethical SIPPs
The quarter saw a reversal of fortunes for the VT Gravis Clean Energy Income fund. This fund looks to provide an income in the region of 4.5% and primarily invests in closed-ended investment companies and yield companies that are involved in the provision, storage and consumption of clean energy.
Although much of the alternative energy universe has continued to suffer, this fund aims to provide a more stable return profile and has benefited over the quarter from names such as Atlantica Sustainable Infrastructure (NASDAQ:AY) and Innergex Renewable Energy Inc (TSE:INE). It returned just over 8%.
The second Asia equity fund on the list is Fidelity Sustainable Asia Equity, which has a focus on stocks with quality growth characteristics, but also provides some exposure to turnaround situations where a catalyst is evident. The return of 5.5% reflected the strength of the market which benefited from both India and China producing strong returns at the same time, in contrast to the recent past.
The next fund on the outperformers’ list is the CT Responsible UK Income fund. The UK market had a relatively strong quarter with equity income funds outperforming the mainstream FTSE All-Share index. This fund has been managed by Catherine Stanley since 2009, with support provided by a team of six who all have input into this portfolio.
The environmental, social and governance (ESG) screening excludes a large proportion of the FTSE 350 and therefore plays to the experience of Catherine in the small-cap space. This market-cap bias aided returns over the quarter, with the 4.8% gain being ahead of the mainstream index and equity income peers. Attribution shows good stock selection in industrials and financials.
- Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
- Royal London Sustainable Leaders’ Mike Fox:three ‘world-leading’ UK shares we’ve owned for over a decade
CT Responsible Global Equity is the final fund on the top five outperformers’ list. The fund has been managed by Jamie Jenkins since 2012. Post the merger between BMO and Threadneedle, the resources supporting him have considerably increased in size which is a clear positive.
The manager looks to invest in companies that are high-quality businesses with strong management and that trade at attractive prices based on the team’s discounted cash flow (DCF) modelling. The approach results in growth and underweight US mega-cap biases versus the MSCI World Index benchmark. The growth bias was a positive over the quarter, with attribution also highlighting the overweight and stock selection in IT, which contributed to outperformance versus the MSCI World index.
Top five ACE 40 funds in Q2 2024
| Group/Investment | 3 months (%) | 1 year | 3 years | 5 years |
| Pacific Assets Ord (LSE:PAC) | 9.14 | 4.95 | 12.74 | 30.56 |
| VT Gravis Clean Energy Income C GBP Acc | 8.02 | -8.42 | -14.08 | 19.33 |
| Fidelity Sustainable Asia Equity W Acc | 5.51 | 2.09 | -15.31 | 16.78 |
| CT Responsible UK Income 2 Acc | 4.82 | 14.76 | 12.78 | 22.13 |
| CT Responsible Global Equity 2 Acc | 3.87 | 19.79 | 15.60 | 62.40 |
Source: Morningstar - Total Return for open-ended/Market Return for closed-ended - (GBP) to 30/06/2024.
Bottom five ACE 40 funds in Q2 2024
| Group/Investment | 3 months (%) | 1 year | 3 years | 5 years |
| iShares Global Clean Energy ETF USD Dist GBP (LSE:INRG) | -3.74 | -25.77 | -35.70 | 31.87 |
| Impax Environmental Markets Ord (LSE:IEM) | -3.60 | -4.26 | -16.25 | 31.60 |
| Liontrust Sust Fut Eurp Gr 2 Net Acc | -2.16 | 7.70 | -15.39 | 18.88 |
| UBS(Lux)FS MSCI Pacific SRI USD Adis GBP (LSE:UB45) | -1.73 | 6.04 | 3.82 | 20.28 |
| Amundi Glb Aggt Green Bd ETF Acc GBP (LSE:CLIM) | -1.59 | 3.02 | -13.98 | -15.79 |
Source: Morningstar - Total Return for open-ended/Market Return for closed-ended - (GBP) to 30/06/2024.
Top five ACE 40 funds over five years
| Group/Investment | 3 months (%) | 1 year | 3 years | 5 years |
| Brown Advisory US Sust Gr GBP B Inc | 2.79 | 27.69 | 34.93 | 115.66 |
| iShares MSCI USA SRI ETF USD Acc (LSE:SUAS) | -0.40 | 14.28 | 33.60 | 95.46 |
| Wellington Global Stewards GBP N Acc | 0.50 | 15.86 | 34.97 | 79.91 |
| UBS(Lux)FS MSCI World SRI USD Adis GBP (LSE:UC44) | 1.20 | 19.74 | 30.12 | 75.21 |
| Baillie Gifford Rspnb Glb Eq Inc B Acc | 1.83 | 12.48 | 26.35 | 69.16 |
Source: Morningstar - Total Return for open-ended/Market Return for closed-ended - (GBP) to 30/06/2024.
Bottom five ACE 40 funds over five years
| Group/Investment | 3 months (%) | 1 year | 3 years | 5 years |
| Amundi Glb Aggt Green Bd ETF Acc GBP (LSE:CLIM) | -1.59 | 3.02 | -13.98 | -15.79 |
| PIMCO GIS Global Bond ESG Instl GBPH Inc | 0.23 | 5.15 | -6.18 | 0.07 |
| Liontrust Sust Fut Corp Bd 2 Grs Inc | -0.56 | 13.61 | -9.38 | 0.57 |
| CT UK Social Bond Z Grs Acc£ | 0.31 | 9.53 | -3.76 | 1.26 |
| RLBF II Royal London Ethical Bond M Inc | 0.42 | 11.91 | -7.68 | 2.15 |
Source: Morningstar - Total Return for open-ended/Market Return for closed-ended - (GBP) to 30/06/2024.
Most-bought ACE 40 funds in Q2 2024
Most-sold ACE 40 funds in Q2 2024
| iShares Global Clean Energy ETF USD Dist GBP (LSE:INRG) |
| Impax Environmental Markets Ord (LSE:IEM) |
| Royal London Sustainable World C Acc |
| Royal London Sustainable Leaders C Acc |
| Pacific Assets Ord (LSE:PAC) |
Changes to the ACE 40 list (under review/developments)
No changes in Q2.
ACE 40 videos in Q2
None in Q2. Visit our YouTube channel to watch Insider Interviews with ACE 40 fund managers.
The ACE 40 investments list is selected and managed by our independent research partner Morningstar and reviewed by our in-house investment experts to help narrow down the wide choice of available investment products. We believe it represents a set of high-quality choices, across different asset classes, regions, and investment types.
However, you should note that the selection of ACE 40 investments list is not a ‘personal recommendation’. This means we have not assessed your investment knowledge, your financial situation (including your ability to bear losses), your investment objectives, your risk tolerance, or your sustainability preferences.
You should ensure that any investment decisions you make are suitable for your personal circumstances, and if you are unsure about the suitability of a particular investment or think you need a personal recommendation, you should speak to a suitably qualified financial adviser.
The past performance of an investment is not a reliable indicator of future results, and ii does not guarantee or predict the future performance of the ACE 40 investments list as a whole or the constituent investments.
Risk Warning(s)
The value of your investments may go down as well as up. You may not get back all the money that you invest.
Investing in emerging markets involves different risks from developed markets, in many cases the risks are greater.
The value of international investments is affected by currency fluctuations which might reduce their value in sterling.
Disclosure(s)
All funds listed are the Accumulation version of the fund, where available, where any income generated within the fund is reinvested automatically. Income versions of these funds may also be available for investors looking for income generated to be paid directly into their account.
Annual performance can be found on the factsheet of each fund, trust or ETF. Simply click on the asset’s name and then the performance tab.
Any changes to the ACE 40 investments list and the rationale behind those decisions will be communicated through the Quarterly Investment Review.
Details of all ACE 40 recommendations issued by ii during the previous 12-month period can be found here.
ii adheres to a strict code of conduct. Members of ii staff may have holdings in one or more ACE 40 investments, which could create a conflict of interest. Any member of staff involved in the development of research about any financial instrument in which they have an interest are required to disclose such interest to ii. We will at all times consider whether such interest impairs the objectivity of the recommendation.
In addition, staff involved in the production of the ACE 40 investments list are subject to a personal account dealing restriction. This prevents them from placing a transaction in the specified instrument(s) for five working days before and after an investment is included or amended and made public within the ACE 40 investments list. This is to avoid personal interests conflicting with the interests of investors in the ACE 40 investments.