How is tomorrow’s world constructed?
Tomorrow’s World is a multi-asset solution that provides diversification across asset classes and markets, together with some portfolio protection. Stock selection for the Tomorrow’s World strategy is driven by the Sarasin global thematic investment process. To achieve long-term capital growth, the team typically invests around 60% of the portfolio in the shares of sustainable businesses around the world, while also maintaining a fixed income allocation of around 30%, looking for borrowers which support positive social and environmental development. For further diversification, the remaining 10% is invested in alternatives, including infrastructure, private equity and cash.
Can you share an example of investments within the strategy?
The development of mRNA vaccines against COVID-19 is just one of the many technological triumphs that marks out the 2020s as the dawn of a new renaissance – like the early 16th century, a period of accelerated innovation and flourishing creativity across science and the humanities.
Illumina is one example of a company enabling extraordinary new achievements with its DNA analysis machines. Whilst the pandemic has demonstrated the value of gene sequencing technology to develop therapies and vaccines, track transmission and conduct health surveillance, the breadth of different new applications of DNA science has yet to be fully recognised.
On the fixed income side, social impact bonds allow investors to attribute capital to specific projects and initiatives in a direct way. They also help us to access markets where the issuer doesn’t have publicly listed equity, such as housing associations. One such example is Golden Lane Housing Association, who are a leading provider of supported housing for people with learning disabilities. The proceeds from their bond issue will be used to purchase additional properties for supported living. From an investment perspective we like the credit profile of this issuer, as the vast majority of their revenue is government backed.
In the alternatives portfolio, we hold the Gresham House Energy Storage Fund, which capitalises on the battery storage market. The UK’s increasing reliance on renewable sources of energy means it needs a solution for supply/ demand imbalances. Battery storage systems represent a cost-effective way of addressing this issue.
1 Source: New Boston Consulting Group GAMMA survey reveals that only 9% of organisations are able to measure their total greenhouse gas emissions comprehensively
Important information
For efficient portfolio management the strategy may invest in derivatives. The value of these investments may fluctuate significantly, but the overall intention of the use of derivative techniques is to reduce volatility of returns. The value of the investments of the fund and the income from them can fall as well as rise and investors may not get back the amount originally invested. Past performance is not a guide to future returns and may not be repeated.
Sarasin & Partners LLP of Juxon House, 100 St Paul’s Churchyard, London, EC4M 8BU, is authorised and regulated by the Financial Conduct Authority with firm reference number 475111.
