Jean-Hugues de Lamaze (JHL) is lead manager of the Ecofin Global Utilities and Infrastructure fund. JHL is French and very approachable. Considering how well his fund has performed since launch in September 2016, he is incredibly grounded (the share price has increased by 152.5% since launch and by 125% in the last 5 years).
We have held Ecofin for our clients from the beginning and during that time, it has been amongst our best performing funds. We have also held Fundsmith (a much better fund) for some time. For comparison Fundsmith has achieved a total return over 5 years of 76% – excellent by any standards but a laggard compared with Ecofin! What is interesting is that Ecofin has achieved this performance as a comparative tiddler vs. Fundsmith – Ecofin’s market cap is £239M as compared with Fundsmith at £23.5 billion – 1/100th of the size!
I spoke on Zoom to JHL on 28th February. I will summarize the conversation shortly but first here is a broad summary of the key characteristics of this fund:
- It’s a closed-end investment company, domiciled in the UK and quoted on the London Stock Exchange.
- The fund invests in the shares of utility and infrastructure companies listed on recognised stock exchanges in the US, Continental Europe and the UK; it also has a 10% cap limit in Emerging markets. It is geographically well diversified.
- The fund’s investment objective is to achieve a high secure dividend yield and long-term capital growth.
- Current yield (that’s income based on the previous year’s dividends) is 3.5%
- The fund is geared – currently 11% of the assets under management have been acquired using borrowings.
- Assets under management are currently £265M.
ANH: How does your fund differs say from HICL, another infrastructure fund we have supported.
JHL: “HICL invests in private, unlisted infrastructure assets to deliver a sustainable dividend. The investments HICL make are generally in public sector schools, hospitals, fibre networks, accommodation, rolling stock and some concession type businesses including utilities. These are illiquid assets not traded on any exchanges. Ecofin Global (EGL) is quite different. We invest solely in globally listed equities principally in OECD markets. Investments include utilities, water, renewable energy and infrastructure companies all paying a sustainable and growing dividend. Our portfolio of 40 to 50 stocks comprises very liquid, large cap, quoted businesses. As you know performance has been good. EGL looks to participate in the transition away from fossil fuels to energy generated by renewables.”
ANH: Can you tell me a little about your support team?
JHL: “I lead a team of 8 very experienced fund managers and analysts, and 2 risk analysts all based in London researching globally listed equity investments. Ecofin also has a team of fund managers and analysts based in the US researching both listed and private investments. More HERE”
ANH: How do you harness the twin objectives of making profits for your investors and adhering to your ESG manifesto?
JHL: “A good and very important question. Firstly, we are not ESG box tickers! In fact, the very opposite; we fundamentally believe that investing in global growth orientated economic infrastructure companies and concentrating on companies which are making the transition towards decarbonisation is not just ethical, it’s profitable! We are investing in clean energy including power and renewable infrastructure listed equities that are projected to take substantial market share from other energy sources in the coming decades. Governments and corporations are driving the energy transition and energy security thematic, and the trust looks for those companies that are making that transition, while avoiding those that are failing to change. We concentrate on finding superior risk/reward opportunities as a specialist with a unique focus on identifying utilities in energy transition.
We encompass ESG through positive stock selection and have an unconstrained universe with no exclusion criteria. Our ESG analysis is highly stock specific; this contributes towards superior shareholder returns through positive selection and investing in companies with an improving ESG profile and avoids companies with major ESG risks. We look at a company’s sustainability profile and take a forward-looking view to seek maximum returns by identifying stocks with the highest rate of ESG improvement.”
ANH: Thank you for your time and best wishes for continuing success.
ANH March 2023