Cleaner Living Monthly Report | February

15 February 2022

 Cleaner Living ETF Monthly Report: Key Takeaways

  • We believe, 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. 
  • While there were individual names that did well in January the overall index was down 13.75%, prolonging the December drawdown. [1]  As the world gets a better handle on the Omicron variant, we expect this short-term volatility to ease.
  • Energy based pressures continued in January leading the Cleaner Energy segment to contribute to 23% of the month’s returns. These pressures bled into Cleaner Building & Infrastructure names with energy focus with that segment contributing to approximately 26% of period returns. [2]
  • F45 Training (FXLV) was the top contributor to performance posting 14.88% in January on a strong earnings release leading the Cleaner Health and Beauty sector’s 9.13% contribution to return. 
  • Overall, the index had a tough month as headline risk dragged down a few names like Peloton Interactive (PLTN) which was hit not just by an announcement they would be suspending production (later refuted  by CEO John Foley) [3] on lower demand but also, for the second time in as many quarters was featured in a popular television show scene involving a character having a heart attack while riding the bike. Unsurprisingly, the company maintains it was not involved in any product placement decisions for that episode. [4]

Please note that all performance figures are showing net data. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product.     

 

Macro Outlook

The main driver of this strategy could be 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. 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, great 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. Other confirming signals supporting this theme include the 7th year marking the first promotion of Veganuary; [5] consumer electronic company Sony (6758) taking steps to enter the electric vehicle market; [6] China including the goal of developing lab-grown meat as a policy position in their latest agricultural five-year plan. [7]

We continue to be optimistic that current supply chain woes will be resolved in the coming quarters. While the rise of omicron variant BA.2 has created yet another unknown, initial indications are that while this variant is more transmissible the effects seem to be relatively muted for affected individuals. [8] This resolution should be beneficial to a number of sectors especially Food & Dining and Health & Beauty sector names. 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 (As of 31.01.22)

1M

3M

6M

YTD

12M

SI

Cleaner Living ESG-S UCITS ETF

-13.76%

-27.14%

NA

-13.76%

NA

-24.01%

Tematica Bita Cleaner Living Sustainability Screened Index

-13.75%

-26.86%

-26.15%

-13.75%

-40.88%

-23.63%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/01/2022

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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