Our speakers

"What propelled the growth in our knowledge is gene sequencing that shone a light on the black box of biology. As we understand more about the chaos of biology, we are able to put a structure around it."

Healthcare is currently undergoing a revolution, Rose explained, moving from ‘sick care’ to genuine healthcare and the pace of this change, particularly of innovation, is getting quicker every day. The next industrial revolution, she suggests, will be linked to biology and its ability to engineer new types of material with micro-organisms developed to produce food, energy, chemicals and so on in a more environmentally-friendly way.

Impact is a critical part of the team’s investment approach – the impact companies can bring to the world, their impact their products and services have on patients and the impact of Baillie Gifford on those companies. Such is its importance, the team recently hired a dedicated impact analyst, from UNICEF, to develop the twin assessment framework of a reduced carbon footprint and increases diversity.

The companies the Fund invests in are those that improve human health and healthcare systems globally, some of which – thanks to the convergence of technology – may be outside the traditional healthcare sectors and, therefore, outside those listed in benchmarks. Rose is looking for exceptional growth businesses to invest in with a five-year time horizon that allows, as she says, the winners to run to design a high conviction portfolio.

"The macros are changing so much it is important right now to look at company fundamentals"

One of the strengths of infrastructure as a sector, Charles outlined, is that many of the companies within its investment universe provide an essential service – from having clean water, heating and energy from gas and electric utility companies, to travel and transport via airports, railways and toll roads. These companies are the life blood of a functioning economy.

They are often governed by regulation or long-term contracts which means many are underpinned by steady and predictable returns streams. This helps them produce resilient cash flows alongside a strong and growing income that allow the team to provide protection for investors in down markets and capture a great deal of any market upside.

Charles believes the sector is on the cusp of a long-term boom, seeing multi-year catalysts for growth in the sector over the next 10-15 years. Part of this comes from the global drive to net-zero carbon emissions which needs huge capital investment if it to be achieved in the timescales set. Infrastructure companies will be a key enabler.

Infrastructure also offers strong inflation protection, a key topic of conversation for investors and households. Inflation has little impact on the underlying value of many infrastructure assets as companies largely pass on this cost to the end user. He described the impact of inflation on both growth and income of his portfolio’s companies as marginal, in some select cases allowing them to grow their profitability.

Charles also explained how they build a portfolio of regulated (utilities) and user-pay (roads, rail, ports, airports) assets, the former often high income but defensive assets while the latter lower income but higher growth assets. The combination provides a consistent, strong, diversified return profile, with modest volatility and a historic yield of close to 5% over cycles.

"The business involved in this cycle tend to experience strong and persistent demand growth and face less competition due the novelty of what they are delivering"

Since launching their first funds back in 2001, Liontrust’s sustainable investment team has always looked to deliver superior returns by investing in sustainable companies.

These are companies contributing to a cleaner, healthier and safer future and the team’s Sustainable Future investment approach is built on belief that such businesses have better growth and greater resilience than the market gives them credit for, and should therefore generate strong long-term returns.

Peter focused on the alignment between companies doing good things and business success, highlighting that, in many ways, the world is getting better. While there remain huge challenges in areas like greenhouse gas emissions, for example, we have seen dramatic improvements in reducing air pollution, child mortality and road traffic accidents over recent decades.

If you examine how change happens, there tend to be three actors at work: science brings greater understanding of an issue, society calls for change and governments set policy and regulation, and finally businesses develop and distribute solutions. What is interesting from an investment point of view is that the companies involved in this cycle tend to experience strong and persistent demand growth and face less competition due the novelty of what they are delivering.

To capture these opportunities, the sustainable team looks at the world through the prism of three trends, Better resource efficiency (cleaner), Improved health (healthier) and Greater safety and resilience (safer) , and 20 themes within these. Change can happen very rapidly as new technology comes along and structural shifts often look obvious after the fact. Peter highlighted the example of transport in New York: back in 1901, there were thousands of horses pounding the streets and a photo shows a single anomaly in the shape of an early car. Just a decade later, however, this cheaper, cleaner and quicker transport solution had taken over and there was barely a horse to be seen – and we expect similar transitions from internal combustion engine vehicles to electric, and gas boilers to electric heat pumps.

On top of performance, the team is also keen to show how the funds are positively aligned with sustainability issues. They have always avoided areas such as fossil fuel extraction and production and, more broadly, traditional car manufacturers, airlines and energy-intensive businesses not positioning for a lower-carbon world. In terms of more positive themes, the funds, on average, have 28% in companies improving resource efficiency and reducing emissions and emit 68% less (in terms of companies held) than the markets in which they invest.

Over the last two decades, Peter said the team has made good on that aim of delivering superior returns by investing in sustainable companies. Looking to the future, he sees so no reason why the powerful trends they have invested behind should not persist, and so looks forward to the next two decades with confidence.

"Electrification of the global energy sector is key to decarbonise our economies, with green hydrogen being the missing link for carbon neutrality."

As we move towards a smart, sustainable, decarbonised energy future, Thiemo explained how he and his team focus, for their Smart Energy portfolio, on those companies providing solutions to reducing CO₂ emissions and energy consumption as a whole – a multi-decade trend at which we are at the very beginning.

Our own estimates forecast 90% of total power generation to be from renewable sources by 2050. New strong demand drivers for electricity include transport, agriculture, big data and heating of buildings, driving up the electricity needs by a factor of 2.5x by 2050. To meet these, for Thiemo the answer lies in solar and wind-generated electricity – solar and wind account for 11% of electricity generation today and is expected to grow to 80% by 2050, so the opportunity set is huge.

Sustainability is key to the team’s investment strategy, looking for solution providers to decarbonise the global energy sector, through renewable electrification and energy efficiency technologies across multiple industries. The team looks at its investment universe through four investment clusters, namely clean power generation, energy transmission and distribution, energy conversion and storage, and energy efficiency.

The largest underweight in the Smart Energy Fund is currently the clean power generation cluster, as this sector is confronted with project delays through labour shortages and increases in raw material costs, while rising interest rates are driving up the capital costs of the clean power utilities. On the other hand, the energy conversion and energy efficiency clusters have a strong overall weight in the portfolio. Companies from these clusters are considered to be strong net beneficiaries of the current supply constraint environment, allowing them to further expand their top and bottom line.