Cleaner Living Monthly Report | August

08 August 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.

July saw the index advance 9.23% as markets began to rally off near-term lows and investors once again began to see value in many oversold names.

All segments were additive to returns this month with Cleaner Homes & Power and Cleaner Transportation contributing to roughly 70% of period returns.

Direct sold solar energy companies Sunrun (RUN-US) [39.94%] and Sunnova Energy Int’l (NOVA-US) [41.18%] were the top two contributors to return combining to account for roughly 20% of overall returns in July while Sunpower (SPWR-US) [28.48%] was also additive.

Some beleaguered names like Cleaner Food & Dining name Beyond Meat (BYND) [33.63%] and Cleaner Health & Beauty company Allbirds (BIRD-US) [30.79%] participated nicely in July’s run up as well.

Cleaner Transportation saw winners, like Tesla (TSLA-US) [32.38%] and Volta (VLTA-US) [41.54%] and some losers like Nio (NIO) [-9.16%], Li Auto (LI-US) [-14.28%] and Xpeng (XPEV) [49.87%] as the Chinese EV space took hits due to the Zero Covid polices pursued by the country. [1]

Source: Bloomberg/ Tematica Research. Please note that all performance figures are showing net data. Past performance is no guarantee of future performance and when you invest in ETFs your capital is at risk.

 

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. 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.

Signals that the Cleaner Living theme is alive and well include the announcement that the US Army has selected EV maker Canoo for evaluation of its platform just after the EV maker inked a deal with Walmart to produce what it is calling Lifestyle Delivery Vehicles (LDV) for the retailer.[2] Another is the announcement by the state of California that it will be allocating $100 million out of its recent state budget to the procurement of plant-based and sustainably produced foods for its school lunch program.[3] Finally, while there are still some states that are actively discouraging the purchase of EVs through additional tariffs and the blocking of the installation of public charging stations, the most densely populated state in the Union, New Jersey, announced it will offer rebates up to $4,000 for the purchase of new EVs. The rebate amounts are variable and depend on the purchase price of the vehicle in an effort right-size the program. [4]

The ongoing Russian war in Ukraine continues to provide challenges for combating inflation concerns which are affecting overall economic sentiment. We continue to 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. 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 pressures.

 

Cleaner Living ETF Performance (As of 31.07.22)

1M

3M

6M

YTD

12M

SI

Cleaner Living ESG-S UCITS ETF

9.16%

-2.09%

-9.51%

-21.96%

NA

-31.23%

Tematica Bita Cleaner Living Sustainability Screened Index

9.23%

-2.02%

-9.48%

-21.93%

-33.15%

-30.86%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/07/2022

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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