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We invest in companies that we consider to be the very best sustainability companies in Europe. These businesses have strong and competitive franchises, exceptional people and distinctive cultures, and resilient financials. Individually and collectively they are solving difficult problems, meeting critical needs, and helping bring about a more sustainable future.

By focusing on the highest quality and best sustainability companies in Europe, we believe we can offer an exciting portfolio that stands out from the crowd.

Why invest in European companies?

World-leading sustainability companies

  • Europe has a large listed universe, including world-leading health care, clean energy, manufacturing and IT companies
  • Many of these companies have large and growing end-markets, including in many emerging economies, and a strong presence globally and locally

Exceptional people and cultures

  • Many companies are run by outstanding management teams and are often controlled by long-term stewards – foundations, families and entrepreneurs
  • Europe has a high concentration of companies with strong cultures, great franchises, and healthy balance sheets and financial characteristics

Sustainability tailwinds

  • Social norms, policies and regulations are often favourable for companies advancing sustainable technologies and solutions
  • European companies are known and respected for setting high standards

Strategy highlights: a focus on quality and sustainability

  • Companies must contribute to sustainable development and make a net-positive impact to a more sustainable future. Portfolio Explorer >

  • We invest in high-quality companies with exceptional cultures, strong franchises and resilient financials. How we pick companies >

  • We avoid companies linked to harmful activities and engage and vote for positive change. Our position on harmful products >

  • Our approach is long-term, bottom-up, high conviction and benchmark agnostic

  • We focus on capital preservation as well as capital growth – we define risk as the permanent loss of client capital

Latest insights

Strategy update: Q4 2022

European (ex UK) Sustainability strategy update: 1 October - 31 December 2022

We entered 2022 with a portfolio of high-quality, leading sustainability companies, with strong management teams, resilient cash flows and safe balance sheets.

However, this was not enough to protect against a challenging investment environment, marred by geopolitical uncertainty, an energy crisis, rapidly rising inflation, and a devastating war.

Many investors exited quality healthcare, technology and small and mid-cap companies and rotated into companies in the traditional energy, resources and banking sectors. This was painful for the strategy and performance in 2022 was disappointing. With the clairvoyance of hindsight, the portfolio should have been more diversified, with less exposure to companies on expensive valuation multiples.

Our main preoccupation throughout the year was on improving portfolio diversification and defensiveness. To this end, we:

  1. Initiated and built positions in two new financial services companies (Handelsbanken: Sweden and Komerční Banka: Czech Republic); two industrial companies (Nexans: France and Assa Abloy: Sweden); a consumer company (Beiersdorf: Germany); a communication services company (Elisa: Finland); and a utility company (Energiedienst: Switzerland).
  2. Sold out of two industrial companies (Kardex: Switzerland and Vestas: Denmark); a technology company (ASML: Netherlands); a healthcare company (Philips: Netherlands); a consumer discretionary company (Mister Spex: Germany); and a utility company (Ørsted: Denmark).
  3. Reduced exposure on a precautionary basis to other higher-rated companies that we thought were susceptible to a correction, including Infineon Technologies (Germany: Information Technology), Nemetschek (Germany: Information Technology), Tomra (Norway: Industrials), Adyen (Netherlands: Information Technology), Rational (Germany: Industrials) and SFS (Switzerland: Industrials).
  4. Took profits in certain companies following good runs of performance and valuations becoming stretched, including NIBE Industrier (Sweden: Industrials), Vitec Software (Sweden: Information Technology), Alfen (Netherlands: Industrials), Beijer Ref (Sweden: Industrials), and Jerónimo Martins (Portugal: Consumer Staples).

In quarter four, we took advantage of attractive valuation opportunities to increase exposure to several holdings, including Inficon (Switzerland: Information Technology), Indutrade (Sweden: Industrials), Sartorius (Germany: Health Care), Roche (Switzerland: Health Care), Alcon (Switzerland: Health Care), Carl Zeiss Meditec (Germany: Health Care), and Novozymes (Denmark: Materials). We trimmed some of our diagnostics exposure by reducing positions in Tecan (Switzerland: Health Care) and bioMérieux (France: Health Care), and some of our more expensive industrial exposure via Nibe, Tomra and Beijer Ref.

As a result of these changes, we believe the portfolio is more robust. The overall (sector-level) exposure to technology and industrial companies is lower than 12-18 months ago, healthcare exposure roughly similar, and exposure to financial and consumer companies slightly higher.

We are becoming steadily more excited about the opportunities that lie ahead. We are fortunate to have slightly elevated cash levels and look forward to increasing positions in some of the highest-quality, best sustainability companies in Europe, at more reasonable valuations.

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

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Stewart Investors Quarterly Client Update Q4 2022

1 October - 31 December 2022

Investment philosophy

  • We are stewards: Our role is to allocate society’s capital to productive uses, in accordance with our Hippocratic Oath
  • We are long term: Our time horizon is measured in years, not weeks, and we value companies accordingly
  • We invest only in companies contributing to a more sustainable future: We engage constructively as owners to help companies on their sustainability journeys
  • We invest only in high-quality companies: We seek out companies with exceptional cultures, strong franchises and resilient financials
  • We believe capital preservation is important for capital growth: We define risk as the possibility of the permanent loss of client capital

Investment objective

To generate attractive long-term, risk-adjusted returns by investing in the shares of high-quality companies that are particularly well positioned to contribute to, and benefit from sustainable development.

Important information

This material has been prepared and issued by First Sentier Investors (Australia) IM Ltd (ABN 89 114 194 311, AFSL 289017) (FSI AIM), which forms part of First Sentier Investors, a global asset management business. First Sentier Investors is ultimately owned by Mitsubishi UFJ Financial Group, Inc (MUFG), a global financial group. Stewart Investors is a trading name of FSI AIM.

It is directed at persons who are professional, sophisticated or wholesale clients and has not been prepared for and is not intended for persons who are retail clients. A copy of the Financial Services Guide for FSI AIM is available from First Sentier Investors on its website. This material contains general information only. It is not intended to provide you with financial product advice and does not take into account your objectives, financial situation or needs. Before making an investment decision, you should consider, with a financial adviser, whether this information is appropriate in light of your investment needs, objectives and financial situation. 

Any opinions expressed in this material are the opinions of the individual author at the time of publication only and are subject to change without notice. Such opinions may substantially differ from other individual authors within First Sentier Investors.

MUFG and its subsidiaries do not guarantee the performance of any financial products mentioned or the repayment of capital in relation to any financial products mentioned. Investments in any investment-type financial products mentioned are not deposits or other liabilities of MUFG or its subsidiaries, and investment-type products are subject to investment risk including loss of income and capital invested. 

To the extent permitted by law, no liability is accepted by FSI AIM, MUFG nor their respective affiliates for any loss or damage as a result of any reliance on this information. This material contains, or is based upon, information that we believe to be accurate and reliable, however neither FSI AIM, MUFG nor their respective affiliates offer any warranty that it contains no factual errors. No part of this material may be reproduced or transmitted in any form or by any means without the prior written consent of FSI AIM.

Some of the information within has been compiled using data from a representative account. This information relates to an existing Stewart Investors strategy and has been provided to illustrate Stewart Investors’ expertise in the strategy. This material is provided for information purposes only and does not constitute a recommendation, a solicitation, an offer, an advice or an invitation to purchase or sell any fund and should in no case be interpreted as such. Past performance is not a reliable indicator of future results.

References to specific securities (if any) are included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same. Any securities referenced may or may not form part of the holdings of First Sentier Investors’ portfolios at a certain point in time, and the holdings may change over time.

© First Sentier Investors Group

Strategy update: Q3 2022

European (ex UK) Sustainability strategy update: 1 July - 30 September 2022

It has been painful seeing the share prices of most portfolio constituents decline this year.

We hold a good variety of high-quality, great sustainability companies, with strong cash flow capabilities, ample liquidity, and safe balance sheets. If the portfolio were a collection of boats, we believe the view below the surface of the roiling sea would be of sturdy hulls and safe anchors and lines.

The economies of most European countries seem to be heading into a recession. Geopolitical tensions are mounting. Decades of short-sighted energy policies are catching up with most European nations. The cost of most things is rising. Interest rates are rising. Debt burdens are rising. Financial liquidity squeezes look increasingly likely. Pressures are mounting on company earnings. There are no miracles in the central bank box of magic tricks.

Though the quarter began with a classic bear-market rally, it was no surprise that share prices retraced in September. Our main preoccupation was the same as the previous quarter: trying to improve portfolio diversification and defensiveness. We replaced two companies, reduced exposure to twelve, and added to eight holdings. As a result of these changes the portfolio cash position ended lower than last quarter, but still elevated; this may well continue to be the case in the months ahead.

We sold the last of our holdings in Vestas (Denmark: Industrials) and Ørsted (Denmark: Utilities). Both investments were mistakes. Both are well-run, but difficult, order-book businesses. Both ought to have a bright future, yet are highly sensitive to regulatory dynamics and fluctuating input costs. The longer we held them, the longer our list of unknown-unknowns became. Other investment ideas seem more likely to deliver a satisfactory return over the coming decade.

Handelsbanken (Sweden: Financials) was brought into the portfolio. It is a full-service bank with a decentralised, customer-focused operating model. It has survived four major banking crises in its 150-year history. During the severe Swedish banking crisis in the early-1990s, it was the only bank not to be either bailed out or nationalised. During the 2008 Global Financial Crisis, it was a net lender to peer banks and to the Swedish (Central) Riksbank.

Handelsbanken has emerged stronger and leaner from a difficult period of restructuring and reorganisation over the last five-odd years. We believe it will continue to improve under the leadership of CEO Carina Åkerström.

We trimmed positions in Tomra (Norway: Industrials), Tecan (Switzerland: Health Care), bioMérieux (France: Health Care), NIBE Industrier (Sweden: Industrials) and Jerónimo Martins (Portugal: Consumer Staples), among others, during the spell of relative share price buoyancy in the early part of the quarter. We built positions in the companies we recently introduced into the portfolio – Beiersdorf (Germany: Consumer Staples), Elisa (Finland: Communication Services), Energiedienst (Switzerland: Utilities) and Komerční Banka (Czech Republic: Financials) – and also added to ALK-Abelló (Denmark: Health Care).

We are long-term investors. We understand patience pays off in a number of different ways. We are also trained to invest into crises. As valuations become more attractive, we become more excited about adding to our favourite companies. We will do our best to balance enthusiasm and patience as we take opportunities ahead of us.

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Named new investments disclosed relate to holdings with a portfolio weight over 1%. It is not a recommendation or solicitation to purchase or invest in any fund. Differences between the representative account-specific constraints, currency or fees and those of a similarly managed fund or mandate would affect results.

Proxy voting: Q4 2022

European (ex UK) Sustainability proxy voting : 1 October - 31 December 2022

Proxy voting by country of origin

Proxy voting by proposal category

During the quarter there were 37 resolutions from five companies to vote on. On behalf of clients, we voted against two resolutions.

We voted against the appointment of the auditor at Chr. Hansen and Coloplast, as they have been in place for over 10 years and the companies have given no information on intended rotation. We believe rotating an auditor on a relatively frequent basis (e.g. every 5-10 years) helps to ensure a fresh pair of eyes are examining the accounts, and follows best practice. (two resolutions)

Source for company information: Stewart Investors investment team and company data. This stock information does not constitute any offer or inducement to enter into any investment activity. Portfolio data shown is from representative strategy accounts of the strategy shown above. Proxy voting chart numbers may not add to 100 due to rounding. SHP means: Shareholder Proposal.

Proxy voting: Q3 2022

During the quarter there were no annual general meetings.

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For illustrative purposes only. Reference to the names of example company names mentioned in this communication is merely for explaining the investment strategy and should not be construed as investment advice or investment recommendation of those companies. Companies mentioned herein may or may not form part of the holdings of Stewart Investors. Holdings are subject to change.

Certain statements, estimates, and projections in this document may be forward-looking statements. These forward-looking statements are based upon Stewart Investors’ current assumptions and beliefs, in light of currently available information, but involve known and unknown risks and uncertainties. Actual actions or results may differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements. There is no certainty that current conditions will last, and Stewart Investors undertakes no obligation to correct, revise or update information herein, whether as a result of new information, future events or otherwise.

Source: Stewart Investors investment team and company data. Securities mentioned are all holdings which have/have had a portfolio weight over 0.5% from representative Asia Pacific Sustainability Strategy, Asia Pacific & Japan Sustainability Strategy, Asia Pacific Leaders Sustainability Strategy, European Sustainability Strategy, European (ex UK) Sustainability Strategy, Global Emerging Markets Leaders Sustainability Strategy, Global Emerging Markets Sustainability Strategy, Indian Subcontinent Sustainability Strategy, Worldwide Sustainability Strategy and Worldwide Leaders Sustainability Strategy accounts up to 31 December 2022.

The Stewart Investors supports the Sustainable Development Goals (SDGs). The full list of SDGs can be found on the United Nations website.

Source for Climate Solutions and impact figures: © 2014–2023 Project Drawdown (drawdown.org). Source for Human Development Pillars: Stewart Investors investment team.

Source for climate solutions and human development analysis and mapping: Stewart Investors investment team. Contributions are defined by the team as demonstrable contributions to any solution, either direct (directly attributable to products, services or practices provided by that company), or enabling (supported or made possible by products or technologies provided by that company).

Investment terms

View our list of investment terms to help you understand the terminology within this document.