Investment FundsClimate Assets Fund

May 2012 Fact Sheet

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Fund Manager Comment

A cautious note underpinned global markets in April after economic reports showed that business activity expanded at the slowest pace since November 2009 in the US and Spain’s economy entered into its second recession. During the month, Spain remained at the heart of European concerns with the downgrade of the country’s sovereign rating, alongside downgrades to a number of Spanish banks by Standard and Poor’s (S&P).

In the UK, the Q1 GDP figure showed a fall of 0.2%, in addition to the contraction of 0.3% in the previous three months, pushing the UK back into a technical recession. The outcome seems to be at odds with the survey data, which has been more upbeat, but at the end of the day these are the official figures and it simply reinforces the view that there will be very little growth in the UK economy this year. In the US, the Q1 GDP figure came in at 2.2% annualised, slightly behind consensus but within the forecast range. Unquestionably, the US seems to be in much better shape than the UK at present. Additionally, the financial strength of corporate America remains strong as about two third of the S&P 500 companies that reported results in April have beaten earnings estimates.

On the currency markets, the euro retreated against the dollar and the yen. In particular, both the yen and the pound benefited from ‘flight to safety’ buying.

Global equity markets ended the month in the red with the Standard and Poor’s (S&P 500) Index in the US and the FTSE World Index declining 2.12% and 2.73% respectively, both in sterling terms. The Fund declined 0.77%.

During the month we locked in profits by selling Johnson Matthey (UK, Energy Efficiency), after a significant share price appreciation year-to-date on the back of improved vehicle manufacturing in the US.

  • Top 10 Holdings
    Pennon Group2.7
    Severn Trent2.7
    American Water Works2.7
    Fresenius2.7
    Etfs Physical Gold2.5
    Borgwarner2.5
    Novo-Nordisk2.3
    Co-Operative 5.125% 20172.3
    Halma2.3
    AES Tiete2.3
    Total25
  • Regional Breakdown
    North America23.0
    United Kingdom20.5
    Europe (ex UK)17.8
    Fixed Interest17.6
    Cash7.1
    Asia Pacific (ex Japan)5.1
    Emerging Markets4.8
    Alternatives4.1
    Total100
  • Market Capitalisation
    Mid Cap ($2- 10bn)36.0
    Large Cap (>$10bn)28.3
    Small Cap ($ 0.5-2bn)6.9
    Fixed Interest & Cash24.7
    Alternative Investments4.1
    Total100
Cumulative performance* (%) to 30 April 2012 1 Month 1 Year Since Launch*
Climate Assets Fund - R Accumulation -0.77 -3.43 13.23

*Launch Date 1 Mar 2010
Past performance is not a guide to future performance and future returns are not guaranteed.

Investment Themes

Energy

Supply of fossil fuels is depleting rapidly and it is set to be under pressure by 2030. In addition, many of the most extensive fossil fuel sources are located in countries of political instability adding security of supply to the problem of energy scarcity. Energy consumption is set to increase 50% by 2030, and many governments have already implemented legislation to reduce carbon emissions. In particularly, Europe is committed to reduce carbon emissions by 20% by 2020.

We will invest in companies providing solutions to the problems of using fossil fuels and energy scarcity & security, such as those involved in renewable energy generation, green transport, products & technologies for green building design & construction and energy efficiency.

Food

Population is growing faster than ever before, with the majority of the growth coming from the developing world. To meet growing demand, food global supply is set to double by 2030. In addition, higher levels of prosperity will lead to changes on dietary choices and increased food consumption of protein rich products.

We will invest in companies providing solutions to the food supply/demand imbalance problem, such as those involved in grain production and harvesting, food testing, food processing measurement & control, and high-tech agriculture supplies.

Health

Ageing, chronic and lifestyle diseases have put serious strain on the healthcare systems across the world. In addition climate change is increasingly responsible for the propagation of infectious diseases which are highly sensitive to changing temperatures and precipitation patterns, such as malaria.

We will invest in companies providing products and solutions to these problems, such as those involved in medical supply & devices, vaccines and products for infections diseases, minimal invasive surgery and medical analysis & testing.

Resources

Population growth and consumer consumption is driving materials usage and waste generation to grow to unsustainable limits. High income countries are generating 0.8 ton of waste per capita per year compared to 0.1 ton of waste per capita per year in the low income countries.

We will invest in companies providing solutions to the problems of resource scarcity, such as those involved in waste management, production and processing of environmentally friendly materials, waste-to-energy, coastal protection, productivity and efficiency gains and process control.

Water

Water is becoming scarcer and more polluted from animal and human waste, industrial processes and the use of pesticides and other chemicals. Studies suggest that a 2°C rise in global temperatures could lead to a 20% reduction in water availability as well as crop yields and a more erratic water supply across many regions.

We will invest in companies providing solutions to the water scarcity problem, such as those involved in water supply and distribution, water analysis, monitoring and purification, water metering and efficient methods for crop irrigation.

Risk Warning: The value of investments and the income derived from them may fluctuate and investors may not receive back the amount originally invested. We strongly recommend that potential investors read the full Prospectus for a comprehensive overview of the risks.
Important information: This document is for general information purposes only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. It is not a personal recommendation and it should not be regarded as a solicitation or an offer to buy or sell any securities or instruments mentioned in it. It is always recommended that potential investors seek independent advice before placing an investment. Unless otherwise stated all statistics have been supplied by Cheviot Asset Management. The ACD is Capita Financial Managers Limited, Ibex House, 42-47 Minories, London, EC3N 1DX. CF Cheviot Balanced Fund is a sub-fund of CF Cheviot Investment Funds which is an open ended investment company authorised and regulated by the Financial Services Authority.
Cheviot Asset Management is authorised and regulated by the Financial Services Authority and is a member firm of the London Stock Exchange.
Registered in England Number: 1754391. Registered Office: 90 Long Acre, London WC2E 9RA.
The Cheviot Balanced Fund is a sub-fund of CF Cheviot Investments Funds. The Authorised Corporate Director is Capita Financial Managers Limited.