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Cleaner Living Monthly Report | November

 

Cleaner Living ETF Monthly Report: Key Takeaways

 

Evidence of the broad theme of Cleaner Living continues to emerge as companies are increasingly adopting positioning and in a growing number of cases, real changes to both product mix as well as manufacturing processes. For Example, McDonald’s (MCD-US), after testing the Beyond Meat (BYND-US) powered McPlant burger in some Nordic countries and the UK are making the menu item available for limited time in a small number of US locations. [1] Again, while McDonald’s is not an index constituent it’s signalling to the overall market is a strong thematic confirmation point.

October saw traditional 4th quarter optimism take root as the index advanced 10.81% for the period. The only segment lagging this past month was Food & Dining based on continuing employment, supply chain and transportation woes. Source: Tematica Research

Ongoing traditional energy supply issues gave a boost to renewable and alternative energy names [2] as both Building & Infrastructure and Energy segments contributed approximately 40% and 37% to period index returns, respectively. Source: Tematica Research. 

Tesla (TSLA-US) was the top contributor to performance in October on a reported 100,000 vehicle sale to car rental company Hertz (HTZZ-US) which, as of month end had CEO Elon Musk tweeting that he had yet to sign any such deal prompting a small retracement. [3]

Past performance is no guarantee of future performance.

 

Macro Outlook

The main driver of this strategy is the structural change that is unfolding in consumer’s preferences and spending for what they are putting both in and on their bodies as well as the environmental impact of using these goods and services. This shift is prompting corporations to begin to adjust positioning, product lines and production that better reflect consumer preferences and values, what is more environmentally sound, and where public policy is heading. [4] As thematic investors, we break the economy into three components: consumers, corporations, and public policy. When we see consumers and corporations pulling in the same direction, we know we have a solid investing theme. When public policy joins them, setting performance thresholds or providing development incentives, all three are moving in the same direction, creating powerful thematic tailwinds, which is precisely what we see with Cleaner Living.

In Europe, greater emphasis has been placed on guiding pandemic-recovery stimulus funds towards incentives and projects that will increase demand for the types of products and services that are in the Cleaner Living investment theme. The same is occurring in much of North America, such as with US President Biden’s proposals in which spending plans are earmarked for Cleaner Living solutions. [5]

Despite the Federal Reserve beginning its tapering program, markets are forging ahead. [6] We continue to be optimistic that current supply chain woes will be resolved in the coming quarters. As vaccines (including booster shots and newly approved pills) become even more widespread we expect that will have a positive effect on current labour woes. This resolution should be beneficial to a number of sectors especially Building & Infrastructure and Transportation. Food & Dining and Health & Beauty sector names often fall into a traditional Consumer Staples sector and given consumers’ willingness to spend on healthier and “better for them” food and products we continue to see some resilience in these sectors in the near-term. 

 

Cleaner Living ETF Performance Table (As of 31.10.2021)

1M

3M

6M

YTD

12M

SI

Cleaner Living ESG-S UCITS ETF

10.70%

NA

NA

4.30%

NA

4.30%

Tematica Bita Cleaner Living Sustainability Screened Index

10.81%

0.97%

NA

4.42%

41.01%

4.42%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/10/2021 

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Please note that all performance figures are showing net data.

 

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