European (ex UK) Sustainability
Investing in 30-45 companies in Europe (excluding the UK), the strategy was launched in January 2022.
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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.
For European investors this strategy is available in our VCC but due to regional differences includes UK companies.
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:
- 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).
- 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).
- 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).
- 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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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.
Strategy update: Q2 2022
European (ex UK) Sustainability strategy update: 1 April - 30 June 2022
Share prices across Europe continued to fall over the quarter. The conflict in Ukraine intensified.
Geopolitical tensions worsened. Worries mounted that shortages of energy and agricultural products will fuel broader inflation and necessitate further interest rate rises. Wage disputes broke out across the continent. Fears rose that economies will weaken.
Against this backdrop of increasing economic fragility and volatility, our main focus was on trying to improve portfolio diversification and defensiveness. Portfolio turnover was unusually high: we replaced four companies, reduced exposure to ten, and added to nine holdings. As a result of these changes, the cash position rose.
We sold Philips (Netherlands) because we believe the company will struggle to execute a turnaround and recover losses since it recalled some of its ventilation products last year. Other investment ideas seem more likely to deliver a satisfactory return over the coming decade.
We sold ASML (Netherlands), a leading supplier of lithography equipment to semiconductor manufacturers, amid concerns about de-rating risk and an increasingly uncertain outlook for the semiconductor sector.
We sold Swiss-listed Kardex, which provides automated storage solutions and material handling systems. The prospects for margin improvement are receding as economic headwinds stiffen.
And to help make room in the portfolio for more defensive names, we also sold Mister Spex (Germany), the digitally-native eyewear retailer. The company is young and could struggle to grow revenues if consumer discretionary spending weakens.
Bechtle, Beiersdorf, Elisa and Komerční banka were brought into the portfolio.
Bechtle is a German-listed, founder-stewarded company with a broad, vendor-neutral portfolio catering to the IT infrastructure and operational needs of its customers. Beiersdorf, also German-listed, is a family-controlled company that was founded 140 years ago. It makes skin, personal care and adhesive products, including leading brands like Nivea and Elastoplast.
Elisa is Finland's market leader in telecommunications and digital services. It has an unusual pricing model based on network speed and quality of service, rather than data volume.
Komerční banka is a well-capitalised, conservatively-run Czech bank, with a solid deposit base and strong asset quality. It pays an attractive dividend and has an ambitious decarbonisation programme covering its lending practices and operations.
Big macro questions swirl around us. Will inflationary pressures ease as economies weaken? Have markets now adequately priced in an economic slowdown? If there is a recession, how long might it last? We don’t know the answers.
The questions preoccupying us are fundamental, bottom-up investment questions. Are we holding the best combination of high-quality, great sustainability companies in the portfolio? Do they have safe balance sheets and good liquidity? Do they have pricing power? Do they have strong cash flow capabilities? Are they reasonably valued? We will keep asking these questions, and questioning our answers, in an effort to improve the resilience of the portfolio.
Within the EU/EEA and Switzerland, the European (ex UK) strategy is only available to investors via a segregated mandate account.
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.
Strategy update: Q1 2022
European (ex UK) Sustainability strategy update: 1 January - 31 March 2022
On the 25 January 2022, the team launched a new European Sustainability strategy portfolio which excludes UK-listed companies. The portfolio comprises 39 companies we consider to be among the very best sustainability companies in Europe (ex-UK), and complements the European Sustainability (inc-UK) strategy, which was launched in mid-2021.
Company selection is driven by fundamental, bottom-up analysis of quality and sustainability considerations – as it always is for all our strategies. The portfolio has also been constructed in a bottom-up way and without paying attention to any benchmark or sustainability index.
For much of the time we expect to hold 30-40 companies and for the ten largest positions to account for 30-40% of portfolio assets, making this a high-conviction and relatively concentrated portfolio. The companies all have strong and competitive franchises, exceptional people and cultures, and resilient financials.
The portfolio combines many of our favourite healthcare, information technology, industrial, clean energy and materials companies. These companies all have long-term growth drivers and large addressable markets. Many of them have international reach and recognition, and diversified revenues from broad exposure to both developed and emerging markets around the world.
The healthcare companies include bioMérieux, the French-listed maker of in-vitro diagnostics reagents, tools and software needed to diagnose infectious diseases, and Carl Zeiss Meditec, the German maker of ophthalmic devices and microsurgery visualisation technologies.
The information technology companies include Adyen, the Dutch-listed payments platform that is helping simplify and facilitate e-commerce, mobile and point-of-sale payments, and Vitec Software, the Swedish-listed owner of niche software companies enabling efficiencies in energy management, education, health and public services.
The industrial companies include Norway’s Tomra, the leading maker of automated recycling, reverse vending and sensor-based sorting technologies, and Belimo, the Swiss-listed maker of energy efficient electrical actuators used to control heating, ventilation and air conditioning systems.
Other companies contributing to the sustainable energy transition include Dutch-listed Alfen, a leading player in smart grids, electric vehicle charging stations and energy storage, and NIBE Industrier, the Swedish-listed maker of energy-efficient heat pumps.
The materials companies include Chr. Hansen (Denmark), a world-leading producer of microbes, cultures and enzymes that are critical for advancing human, animal, plant and soil health, and Sika, the Swiss-listed maker of sealing and bonding materials used in the building and auto industries.
The strategy launch coincided with highly volatile market conditions and some sharp share price declines. Companies that had performed well last year were broadly sold. Capital shifted into cyclical beneficiaries of rising inflation: traditional energy, commodity and financial sector companies. Russia’s invasion of Ukraine in February accelerated many share price falls.
We took the opportunity to add to a number of our favourite companies at more attractive valuations, including three diagnostics companies: Tecan (Switzerland), DiaSorin (Italy) and bioMérieux (France). We reduced shareholdings in two Danish wind power companies, Vestas and Ørsted, following a strong – we believe excessive – response to broader energy security concerns. We also trimmed Alfen (Netherlands) in order to control position size following a very strong run-up in the share price.
By focusing on Europe’s highest-quality and best sustainability companies outside of the UK, the aim is to offer an exciting portfolio that stands out from the crowd. We want it to be a portfolio of genuine sustainability leaders, not companies that simply tick an environmental, social and governance (ESG) box.
Within the EU/EEA and Switzerland, the European (ex UK) strategy is only available to investors via a segregated mandate account.
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.
Proxy voting: Q2 2022
European (ex UK) Sustainability proxy voting : 1 April - 30 June 2022
During the quarter, there were 475 resolutions from 27 companies to vote on. On behalf of clients, we voted against 14 resolutions.
We voted against Alcon’s board remuneration and their remuneration report as we believe the CEO and Chair’s remuneration is high compared to the rest of the executive committee. We also have reservations on the company awarding discretionary bonuses. (two resolutions)
We voted against Atlas Copco’s remuneration report as no progress appears to have been made to address shareholder concerns. The CEO's total remuneration exceeds that of peers and there is no disclosure on short-term incentive plan (STIP) targets. (one resolution)
We voted against Beijer Ref’s remuneration policy and report, as we believe it lacks disclosure on performance-related measurements and is skewed to the short term. (two resolutions)
We voted against the appointment of the auditor at Energiedienst, Indutrade, LEM Holdings, Ørsted, SFS and Vestas 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 following best practice. (six resolutions)
We voted against Philips’ remuneration report as we believe it is unnecessarily complex and is subject to repeated adjustments to facilitate payments to management. (one resolution)
We voted against the appointment of the auditor at Sika, as per our comments on auditor rotation above. We voted against an independent proxy to vote on additional or amended proposals in accordance with the board of directors at the annual general meeting (AGM) of shareholders. We consider ourselves active shareholders and prefer to vote on such matters at the AGM. (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: Q1 2022
European (ex UK) Sustainability proxy voting : 1 January - 31 March 2022
During the quarter there were 135 resolutions from eight companies to vote on. On behalf of clients, we voted against four resolutions.
We voted against the appointment of the auditors at Infineon Technologies, Ringkjøbing Landbobank, Novozymes and Belimo as all have auditing firms which have been in place for over 18 years. 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 following best practice. (four 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.
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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
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Fund data and information
Key documents
Fund prices and details
Click on the links below to access key facts, literature, performance and portfolio information for the funds and share classes available in this jurisdiction:
Stewart Investors European (ex UK) Sustainability Fund
| Fund name | Fund type | Currency | Price | Daily change | Price date |
|---|---|---|---|---|---|
| Stewart Investors European (ex UK) Sustainability Class B (Acc) | OEIC | GBP | 100.13 | 0.17 | 31 Mar 2023 |
| Stewart Investors European (ex UK) Sustainability Class E (Acc) | OEIC | GBP | 100.42 | 0.17 | 31 Mar 2023 |
Share prices are calculated on a forward pricing basis which means that the price at which you buy or sell will be calculated at the next valuation point after the transaction is placed. Where a fund price is marked XD, this means that the fund is currently Ex-Dividend. Past performance is not necessarily a guide to future performance. The value of shares and income from them may go down as well as up and is not guaranteed. Please note that the yield quoted above is not the historic yield. It is considered that the yield quoted represents the current position of investments, income and expenses in the fund and that this is a more accurate figure. Investors may be subject to tax on their distribution. The yield is not guaranteed or representative of future yields. You should be aware that any currency movements could affect the value of your investment. The Funds within the First Sentier Investors Global Umbrella Fund plc (Irish VCC) are denominated in USD or EUR.
