Each fund manager has different ways of whittling down the pool of companies they could potentially invest in. For Hamish Chamberlayne, manager of the Janus Henderson Global Sustainable Equity the starting point is what the company does.
He wants to invest in companies whose products, goods or services have a beneficial impact on the development of a sustainable economy. “That’s how we define our investment universe. The first question I ask myself is: is the world a better place because of this company?," he says.
The fund has 59 holdings and focuses on long-term themes such as environmental and social issues. “This gives us a very rich and diverse universe to choose from – we like companies that are on the right side of things," says Chamberlayne.
The five-star fund has delivered annualised returns of 14.4% over five years, consistently beating its category. Chamberlayne says its testament to the fact that investing sustainably doesn't mean investors need to compromise their returns.
Buy: Texas Instruments
Chamberlayne likes companies that are global leaders in their field and Texas Instruments (TXN) is an example of this, being one of the world’s largest semiconductor producers. Located in Dallas, Texas, the company designs and makes chips used in everything from cars to computers and medical devices
Chamberlayne first invested in the company in September 2017 when shares were $82. He says: “It’s a fantastic business and we expect a strong multi-year run as the penetration of semiconductor grows into all parts of our economic.”
While Chamberlayne likes to hold stocks for several years, he often trims his holding to take profits and invest more back in when there is an opportunity. He explains: “We bought 80% of our position in Texas Instruments in 2017 and have made a substantial profit thus far, but we still see further upside."
Indeed, he has recently topped up this position, buying more of the stock shares were $120. They have since climbed further to $133.
Hold: Autodesk
Chamberlayne has held software company Autodesk (ADSK) since November 2017, when its shares were trading at around $116. Its software is used by 60% of the world’s architects and engineers, and also owns a platform called Fusion used by engineers to create 3D models.
“We quickly made this a large position size [3% of the assets] and the stock is now trading at $206," says Chamberlayne. He particularly likes the company's change in pricing from a one-off fee to a subscription model, which generates recurring revenue for the business and allows customers to benefit from any updates to the software.
“One of the problems with the life base models was that it came on a disc and was easily copied, which led to lots of piracy and meant customers were sticking with older versions of the software,” says Chamberlayne.
The shift to subscriptions is still underway and Chamberlayne wants to keep hold of the stock while more customers move to the new payment plan. The wide usage of the software makes for a sticky user base too, as many people are unable to do their job without Autodesk's products. “It’s becoming a need such as electricity or water,” he says.
Sell: Tesla
Chamberlayne has been trimming his position in electric car-maker Tesla (TSLA) after the stock had an incredible run over the last year – shares are up 162% over the past 12 months.
He first invested in Tesla in 2016 when shares were around $250 and has since trimmed and added to his position as the shares have moved. "We have been selling again over the past few weeks when the shares climbed to more than $700 - we are an active manager and we manage position sizes and risk," says Chamberlayne.
While he may be trimming his stake in the company, he is still a huge fan of the business. “It has an incredible positive impact with its technologies and products," he says. "In December 2019, Tesla showed a picture of a muddy field outside Shanghai and announced it would have built a factory within an year - everyone thought it was crazy in such a short period of time, but they did. It’s incredible. We are still excited about the long opportunities of Tesla.”
