Schroder ISF Global Climate Change Equity

The fund
A best ideas global portfolio

Schroder ISF Global Climate Change Equity will invest in 50-100 best ideas from a universe of around 500 climate change companies.

The portfolio is structured around five key investment themes:

1. Energy efficiency

   Case study: Philips, The Netherlands

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   Demand for energy efficiency spans a wealth of industries and products. Investment potential will be significant as business strives to match changing regulation and consumer behaviour. For example, LED and compact fluorescent lighting is up to 85% more efficient than standard incandescent (e.g. tungsten filament) lightbulbs.  Advances in this field are currently driving a growth cycle for Philips lighting.

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2. Low carbon fossil fuels

   Case study:  BG, UK

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   Natural gas is twice as ‘clean’ as coal, the primary fuel currently used for electricity generation. Consequently, around the world, natural gas is becoming the preferred fuel and this is leading to strong demand growth. BG is a world leader in the exploration and production of natural gas.

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3. Clean energy

   Case study: Wacker Chemie, Germany

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   The harnessing of solar power requires pure poly-silicon for which Wacker Chemie is a leading provider. Long term projections based on rising demand indicate possible increases of 20–40 times current poly-silicon production by 2025*.

   *Source: Schroders estimates as at June 2007.

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4. Sustainable transport

   Case study: Toyota, Japan

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   Transport emissions will be transformed by new engine technologies such as electric or fuel cell powered vehicles. In the short term, stricter emissions standards for road transport will cause a shift to more fuel-efficient vehicles such as diesels and hybrids (electric and petrol engines).  Toyota currently has over three quarters of the world’s hybrid vehicle market.

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5. Environmental resources

   Case study: AGCO, US

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   Bio-fuels (fuel made from living things, or from the waste they produce) are beginning to feature in renewable energy policies worldwide. This is causing dramatic flow-on effects to farming and agriculture and impressively, in the US, the production of ethanol (derived from corn) is forecast to grow by 100% by 2012*.

   Rising global use of bio-fuels is positively affecting agricultural industries by increasing commodity and food prices. As a result, increased farm profitability has inspired a willingness to invest in new farm equipment and an increased demand for fertilisers and new crop technologies. AGCO is one of the largest agricultural machinery manufacturers in the US.

   ^*Source: United States Department of Agriculture.

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We think that these areas will benefit most from efforts to mitigate or adapt to climate change, representing the greatest opportunities for investors.

*Allocation to investment themes as at 31/05/08. These are subject to change.

The team – Find out how we are going to uncover these opportunities.