EcologyFunds.com

(2021 Annual Performance Review)

 

2021 Witnessed a material disparity in performance between Ecology, Clean Energy and Clean Water managed funds and similarly classified ETFs, with managed funds significantly outperforming ETFs

Ecology Managed Fund and ETF performance and fund information is recorded and published at:
http://www.EcologyFunds.com

 

Performance by Fund Type

2021 saw some very strong performances for Ecology, Clean Water and Clean Energy managed funds, building upon the impressive performances witnessed in 2020. The graph below depicts the average quarterly returns for managed funds in each of the 3 categories. 

Clean Water managed funds provided the most consistent outperformance in 2021. These funds returned an average of +30.3% on the year and had their strongest performance in the second quarter (April-June) of 2021. Funds in this sector invest primarily in clean water accessibility and water purification, which many experts believe will achieve exponential growth in the coming decades.

Ecology funds were the second-best performing category of fund in the sector, achieving an average return of +19.0% on the year. As depicted in the graph below, Ecology funds generally have less volatility and higher Sharpe ratios than their Clean Water and Clean Energy counterparts. Ecology mandate funds typically invest in a range of environmental service and waste management firms, which produce consistent and stable revenues. These services are expected to experience continued growth as economies attempt to become ‘circular’ and to produce less waste.

Clean Energy funds are the third category of funds in the sector. Clean Energy funds achieved an average return of +15.4% in 2021. These funds had their strongest showings in Q1 before a swift downward correction ensued in Q2 and Q3. Funds in this sector invest primarily in companies involved in renewable and clean energy production and distribution. The clean energy industry has been the focus of attention from both retail and institutional investors, which can in part explain the significant volatility witnessed by these managed funds.

The top-performing Clean Water fund of 2021 was the Thematic Water Fund managed by Arnaud Bisschop. The fund returned +40.9% by investing in companies involved in water demand management and pollution control as well as in water infrastructure companies. The fund’s top holding was Danaher Corporation (3.72% NAV), which is a Fortune 500 science and technology conglomerate that operates in a variety of industries.

The top-performing Ecology fund of 2021 was the LBBW Global Warming Fund. The fund is managed by Christoph Keidel and returned +37.1% on the year. The fund’s objective is to invest in companies whose “business success is tied to the global warming phenomenon.” One of its top holdings is Thermo Fisher Scientific Inc (4.03% NAV), which is an American supplier of scientific instrumentation, reagents, and consumables as well as software services for the sector.
 
The top-performing Clean Energy Fund for the year was the Blackrock Global Funds – Future of Transport Fund, which delivered a return of +33.9% in 2021. The fund is managed by Charles Lilford and seeks to maximize returns by investing “at least 70% of its total assets in the equity securities of companies globally whose predominant economic activity comprises the research, development, production and/or distribution of technologies used and applied to transport.” The fund’s top holdings are Infineon Technologies (4.07% NAV) and TE Connectivity Ltd. (4.05% NAV). Infineon is one of the world’s largest semiconductor manufacturers, while TE Connectivity is a producer of connectors and sensors for various industries, including automotive, communications, and aerospace.

Source: www.ecologyfunds.com/

Green sector ETFs severely underperformed managed funds in 2021, with the average ETF returning -1.5% on the year. This decline comes pursuant to the outsize gains achieved in 2020. Many green sector ETFs doubled in value in 2020, most notably Clean Energy ETFs which lead on to a significant downward correction in 2021. Not all green sector ETFs struggled in 2021, however, and there was a large disparity in performance between the different green sectors. The chart below depicts 2021 average ETF performance by sector.



With a similar result to managed funds, Clean Water ETFs were the lead sector performers in 2021 returning an average of +28.4% on the year. A notable performance was delivered by the First Trust Water ETF, which returned +31.5% in 2021. The ETF's objective is to seek investment results that correspond generally to the price and yield of the ISE Clean Edge Water Index, which is comprised of companies in the potable and wastewater industry. The fund's top holding is Essential Utilities, Inc. (4.29% NAV), which provides "drinking water and wastewater treatment infrastructure and services" in North America.

Clean Energy ETFs delivered the poorest green sector ETF performance in 2021 with an average annual return of -20.85%. The VanEck Vectors Low Carbon Energy ETF managed the best performance amongst Clean Energy peers while still returning a negative -3.20% on the year. The ETF’s objective is to track "the overall performance of renewable energy companies which may include, but is not limited to: wind, solar, hydro, hydrogen, bio-fuel or geothermal technology, lithium-ion batteries, electric vehicles and related equipment, waste-to-energy production, smart grid technologies, or building or industrial materials that reduce carbon emissions or energy consumption." The fund's top holding is Iberdrola Sa (8.91% NAV), a Spanish multinational electric utility company based in Bilbao, Spain.

Source: www.ecologyfunds.com/