The next 10 years: Inside Mirova’s Global Sustainable Equity Fund

It’s been 10 years since the launch of the Global Sustainable Equity Fund. What was the rationale back then?

Jens: The reason why we launched an active, sustainable and multi-thematic fund is because we are convinced that over the long run this will give investors the best portfolio from a risk-return point of view.

Equally, we also believe that every company, including ourselves, have a role to play in how the world is going to look in the future. We want to make a positive impact overall, and we saw this as a natural combination looking to marry performance with impact.

That may sound simple enough. But, when we started over a decade ago, this was a relatively novel concept: most investors were looking at single themes, like water or climate, and sustainable funds were in their infancy. We thought this could be a product that would work for big and small investors alike. But to do that, we would have to have a more diversified, multi-thematic approach.

How would you describe your investment style? Has it evolved at all?

Hua: I joined in March 2014, just a few months after the strategy launched, but the overall investment philosophy remained much the same: We are biased to quality growth companies that are well exposed to the big transitions reshaping our economy over the long term: demographics, technology, environment and governance. And we only add new positions if we see attractive upside potential in the stock.

As a result, we have been structurally overweight the healthcare sector with strong exposure to technology, because we believe in the strong secular tailwinds coming from the technology and demographics transitions, and we are still in the early stages of some of these themes. For example, we like specific areas like AI, digital payments, and parts of the healthcare sector offering solutions for an aging population.  Over time, how we play individual themes can shift and we may see themes strengthen.   

That sounds like a very wide opportunity set?

Hua: Of course, we are not only thematic investors, we implement a sustainable approach as well, looking for those companies best positioned within those four major transitions to create value over the long term. A key difference between Mirova's sustainability approach from many other asset managers that do sustainable investing is that we value the contribution of a company to the sustainable development goals, not only through its products and services, but also through their practices.

This means that we don’t simply invest in renewable energy, but also many other companies, either healthcare, information technologies, utilities etc., and we look for opportunities across these value chains. That makes us unique, and offers a global equity portfolio that can play a role in investors’ core equity allocations.

Soliane, you recently became a co-manager in 2022. What’s changed?

Soliane: I must admit that there hasn’t been a huge change. It’s been more of an evolution than anything else. We are long-term investors and have a high conviction-based portfolio with low turnover. So, me joining the team has not made a huge difference to the portfolio. I was also part of the portfolio team as an analyst, so I knew a lot of the names in the portfolio already.

Personally, as well, it’s been a very smooth transition because I  knew the team when they were based in Paris 10 years ago, and I’ve received a warm welcome from the whole team since joining.

The portfolio management team is diverse. Has this helped?

Jens: We definitely view it as a strength. Soliane is Continental European. I am too by birth, but I’ve now spent a lot of time in the US, and Hua brings an expertise of the Asian market thanks to his Chinese origins. Naturally, this gives us lots of diverse views.

In terms of themes and expertise, I come from a traditional sustainable and thematic background, and so does Hua. But Soliane’s  background is in diversity, and she mainly focused on Europe for a long time. So, we think our experiences are  very complementary.

You all know each other very well. Is this an issue at times?

Jens:  I’ve been working with Hua for nearly a decade, and with Soliane for almost as long at Mirova. You can anticipate what the other is going to say and you know each other’s strengths and weaknesses. I think that self-awareness can be a strength.

But , with familiarity like this, because we have been working together for so long, you need to keep an open mind, or it can be an issue. With the expansion of the team, I think we’ve brought in a good mix of internal and external people, including more analysts that can give us new ideas.

Soliane: And I think we’ve built a great atmosphere and we have forged very strong links. We respect each other a lot while feeling free to tell each other what we think or why we think they may be wrong. You can do that respectfully.

How are you looking at the next 10 years?

Hua: A lot can change in 10 years. We all wish we had a crystal ball, but it is important to keep the long-term approach that we take in mind. We have a great team that works well together, but we still need to tap into those long-term winning themes if we’re to outperform the benchmark.

Soliane:  I think it's really about people. If you look at the three portfolio managers, we all have different backgrounds. I think it enables us to have a deeper understanding of the companies that are both in Europe and in the U.S., and we are able to meet them on a regular basis due to our proximity. We better understand the regulatory environment, the economics and the politics.

Lastly, sticking to our long-term vision and continuous improvement. Always questioning what we can improve, both as a team and as individuals.

Jens: Looking back on what we've achieved, I think we should be very, very proud. We’ve grown quite significantly. And within global equities in general, we're scoring very well in the peer group over since inception, so we’ve achieved what we set out to do.

But, more importantly, we’ve built a very good foundation to continue to outperform and to continue to grow from here. We must do that. So, there's always things we can fine tune and do a bit better, and that's what I’m really focused on.