Industry Voice: Impact Opportunities - H1 2020 Report

Demand for impact investing has been on the rise: according to the Global Impact Investing Network (GIIN), a study of 1,700 impact investors found that aggregate assets under management increased from $502bn in 2019 to $715bn this year. And as the world wrestles with the unprecedented challenge of the coronavirus pandemic, we have seen this demand accelerate further as the virus has put the need for impact investing under the spotlight.

In the first six months of the year, societies and economies everywhere as well as financial markets were affected by Covid-19. While the full effects of the global pandemic are still unfolding, these events have further cemented my vision for impactful companies - that is, that they are the drivers of future growth, and by investing in these new growth areas, we are investing in tomorrow's leaders today.

Against the backdrop of the pandemic, I believe a paradigm shift is taking place: the wider market is beginning to acknowledge that companies providing solutions to the unmet needs of society and the environment are exposed to more enduring demand and, in turn, higher potential for better growth outlooks. Indeed, this belief is core to our investment philosophy - and it helps us to demonstrate to investors how they may be contributing to the betterment of society and the planet as well as the Sustainable Development Goals.

Impact investing: a key role to play in reshaping the future

As countries, sectors and supply chains continue to grapple with the pandemic, the outlook remains uncertain for many industries. That said, the volatility that markets experienced in the first half of the year provided us with emergent opportunities: we added a few new holdings to the Fund and I believe there will likely be similar opportunities in the second half of the year.

I am pleased with the resilience that our Fund has demonstrated during this period of tumult. We are currently in the midst of the second quarter reporting season, and I am delighted to report that the majority of our holdings have reported earnings above expectations, with some even raising guidance for the full year. This is a testament to our investment philosophy which seeks to identify businesses that are exposed to scalable and enduring demand while providing innovative solutions to world's most pressing needs. We will continue to seek outperformance opportunities by investing in long-term holdings succeeding in their core purpose: to generate value by creating positive and sustainable change. And in doing so, active and collaborative corporate engagement will be an essential part of this approach: it results in better alignment between all stakeholders in a business and encourages investors to take a truly long-term perspective. As we work alongside our experienced stewardship team, EOS at Federated Hermes, we will endeavour to share examples of our engagement progress and discussions in our upcoming quarterly reports. 

Having joined the international business of Federated Hermes in February 2020, I feel privileged to be leading an impact investing team which targets truly impactful companies. As client demand for sustainable investment solutions continues to rise, we have bolstered our team with two new members: Jordan Patel joined in July as a Senior Analyst, while Amélie Thévenet will join us in September, with a view to her becoming a co-portfolio manager in due course.

I encourage you to delve into the details of the Impact Opportunities: H1 2020 Report to find out more about our recent activity and performance, our engagement progress, and how we have been investing in finding solutions to pandemics through our impact themes.

Yours sincerely,

 

Ingrid Kukuljan, Head of Impact Investing, Federated Hermes

 

 

 

 

 

Read our full Federated Hermes Impact Opportunities Fund H1 2020 report

 

The value of investments and income from them may go down as well as up, and you may not get back the original amount invested. Any investments overseas may be affected by currency exchange rates. Past performance is not a reliable indicator of future results and targets are not guaranteed.

For professional investors only. This is a marketing communication. This document does not constitute a solicitation or offer to any person to buy or sell any related securities, financial instruments or products; nor does it constitute an offer to purchase securities to any person in the United States or to any US Person as such term is defined under the US Securities Exchange Act of 1933. It pays no regard to an individual's investment objectives or financial needs of any recipient. No action should be taken or omitted to be taken based on this document. Tax treatment depends on personal circumstances and may change. This document is not advice on legal, taxation or investment matters so investors must rely on their own examination of such matters or seek advice. Before making any investment (new or continuous), please consult a professional and/or investment adviser as to its suitability. All figures, unless otherwise indicated, are sourced from Federated Hermes. All performance includes reinvestment of dividends and other earnings.

Federated Hermes Investment Funds plc ("FHIF") is an open-ended investment company with variable capital and with segregated liability between its sub-funds (each, a "Fund"). FHIF is incorporated in Ireland and authorised by the Central Bank of Ireland ("CBI"). FHIF appoints Hermes Fund Managers Ireland Limited ("HFMIL") as its management company. HFMIL is authorised and regulated by the CBI.

Further information on investment products and any associated risks can be found in the relevant Fund's Key Investor Information Document ("KIID"), the prospectus and any supplements, the articles of association and the annual and semi-annual reports. In the case of any inconsistency between the descriptions or terms in this document and the prospectus, the prospectus shall prevail. These documents are available free of charge (i) at the office of the Administrator, Northern Trust International Fund Administration Services (Ireland) Limited, Georges Court, 54- 62 Townsend Street, Dublin 2, Ireland. Tel (+ 353) 1 434 5002 / Fax (+ 353) 1 531 8595; (ii) at https://www.hermes-investment.com/ie/; (iii) at the office of its representative in Switzerland (ACOLIN Fund Services AG, Leutschenbachstrasse 50, CH-8050 Zurich www.acolin.ch). The paying agent in Switzerland is NPB Neue Privat Bank AG, Limmatquai 1/am Bellevue, P.O. Box, CH-8024 Zurich.

Issued and approved by Hermes Fund Managers Ireland Limited ("HFMIL") which is authorised and regulated by the Central Bank of Ireland. Registered address: The Wilde, 53 Merrion Square, Dublin 2, Ireland. HFMIL appoints Hermes Investment Management Limited ("HIML") to undertake distribution activities in respect of the Fund in certain jurisdictions. HIML is authorised and regulated by the Financial Conduct Authority. Registered address: Sixth Floor, 150 Cheapside, London EC2V 6ET. Telephone calls will be recorded for training and monitoring purposes. Potential investors in the United Kingdom are advised that compensation may not be available under the United Kingdom Financial Services Compensation Scheme.