Cleaner Living Monthly Report | May

16 May 2022

 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. [1]

April saw the index decline -12.95% as markets continued to react to the ongoing Russian invasion of Ukraine. [2]

Energy and energy exposures continued to dominate index returns with Building & Infrastructure, Transportation and Energy segments accounted for approximately 77% of period returns. 

While Energy, and Building & Infrastructure segments detracted overall, Energy names SMA Solar Tech (S92-DE) [9.03%] and Encavis (ECV-DE) [4.49%] were the two of the top three individual contributors to return this past month. [3]

Leading returns this month was Food & Dining name Simply Good Foods Company (SMPL-US) [9.75%].

Health & Beauty, and Food & Dining Names provided some resistance this past month as inflation concerns weighed on constituents like Peloton Interactive (PLTN-US) [-33.54%] as the company announced it was pivoting its business plan to focus more on subscriptions and implementing subscription price increases as it plans to reduce the price of its hardware products. [4]

Please note that all performance figures are showing net data. Past performance is no guarantee of future performance. Source: Bloomberg/ Tematica Research.

 

Macro Outlook

The main driver of this strategy is the structural change that we believe is unfolding in consumers’ 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.[5] 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.

Confirming signals supporting this theme include Ferrari’s latest offering of the Ferrari 296 GTB, a $322,986 (base price) plug-in hybrid V6 powertrain [6] that achieves a combined gas + electric 60 mpg while still being able to hit a top speed of 205 mph (330kph). Another confirming signal is not just to first the continued development and approval of bio-based jet fuels [7] but also the ongoing development of all electric airplanes. [8]

The ongoing war in Ukraine continues to provide challenges (and some opportunities) for energy markets as well as inflation concerns that are starting to bleed into overall economic sentiment.[9] We do see some headwinds for this strategy as central banks have begun to combat inflation by raising rates in an attempt to quell demand which, in theory should reduce price pressure as producers look to entice buyers to resume higher levels of consumption.[10] Still, 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 despite current inflationary pressures.

 

Cleaner Living ETF Performance (As of 30.04.22)

1M

3M

6M

YTD

12M

SI

Cleaner Living ESG-S UCITS ETF

-12.98%

-7.58%

-32.66%

-20.29%

NA

-29.76%

Tematica Bita Cleaner Living Sustainability Screened Index

-12.95%

-7.61%

-32.42%

-20.32%

-33.40%

-29.44%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/04/2022

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.

 

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