Tesla, Disney and Kingspan are three companies that FE fundinfo Alpha Manager Hamish Chamberlayne has recently changed his position on in his £1.4bn Janus Henderson Global Sustainable Equity fund. 
The five FE fundinfo Crown-rated fund typically has a very low turnover approach, with just 20-30 per cent of the portfolio shifting in the last seven to nine years, but recently Chamberlayne (pictured) has made several significant changes.
The first is decreasing its Tesla allocation, following the electric car maker’s purchase of $1.5bn in Bitcoin.
Chamberlayne said Tesla is a company he has followed for years and has been a very successful investment for the fund. “I still really like the company - I think it's incredibly innovative,” he said.
Elon Musk’s electric car giant was a major stock market winner last year. It was up by almost 700 per cent by the end of 2020, when it was officially added to the S&P 500 index.
But Chamberlayne explained that he’s held back on making it one of the larger positions in the fund because of ongoing concerns about cash flow and valuation.
He said: “And so Tesla, we've sort of kept it as a standard position size in our portfolio and we've harvested our gains as the stock has gone up.
“Recently we've reduced it further because we didn't like the Bitcoin announcement and we thought … it was prudent after the stock had such a good run that we reduced our position size.”
Chamberlayne clarified that he still thinks Tesla is a good opportunity, as he remains invested. But, on the Bitcoin sale he said: “I just don't understand it yet. So I'm waiting to be given further explanation.”
“Tesla is obviously a story that we’ve been following for a very long time. It’s a stock that's made a good contribution to our performance. But I wouldn't want to overstate the importance of Tesla to our performance or our portfolio. And certainly, as it stands today, Tesla is not an important position in our portfolio.”
The Janus Henderson Global Sustainable Equity fund launched in 1995 and has been run by Chamberlayne since 2013. His co-manager, Aaron Scully, joined mid-2019.
The pair run a dedicated sustainable strategy, avoiding companies they feel are having a negative impact on the development of a sustainable global economy.
“Our mission has always been very simple,” Chamberlayne said.
“Our mission has been to demonstrate that an investment approach that incorporates sustainable development principles in a rigorous and structured factual fashion can generate excellent investment performance.”
With that in mind careful considerations are made to the ESG (environmental, social and governance) requirements of potential holdings.
But recently the portfolio divested from two companies, Disney and Kingspan, partly due to ESG concerns.
Chamberlayne explained that it was very rare that the fund divested or that the business and ESG cases were not linked in its holdings.
When considering whether to sell, he said: “You've always got to calibrate between should you divest because you don't like the investment case anymore, because you see the risk as being too great? Or do you engage to mitigate that risk and see if you can find a solution through engagement or better understand through engagement?”
In the case of Disney, it was issues around the lack of engagement that drove the sell decision.
In his commentary for Q4 2020, Chamberlayne said: “Put simply Disney is not the same company we originally invested and there have been a number of business fundamental, cultural and ESG flags that have accumulated in such a way that we saw risk to its resilience.”
He expanded that “with Disney we ultimately came to the conclusion that engagement was not really working. We were finding engagement challenging”.
This was a problem for the management team because engagement is an important part of being a sustainable investor, according to Chamberlayne.
He said: “And when we find engagement challenging that's something which weighs heavily on our willingness to hold a company, because we like the idea of being able to engage with management teams and to feel that we've got a voice.”
In the case of Kingspan, Chamberlayne explained that following the Grenfell Enquiry it changed the risk profile of the company “that we couldn’t get comfortable with”.
The enquiry found that Kingspan's K15 insulation was used in part of the flammable cladding system used on Grenfell Tower.
He said: “In the case of Kingspan, we saw a company that we suddenly felt we didn't have a good understanding of the extent of the risks associated with what was coming out of the Grenfell Tower inquiry. There were some quite shocking revelations coming out of that situation.
“And we suddenly felt that we didn't have a good understanding of these risks. How far could these risks stretch, could there be class action lawsuits? What was the potential reputational damage? Was this endemic of something rotten in the culture at the company. These are the types of questions that you start asking.
“I'm not saying that any of these are true but it's the type of risk that you start seeing rise up.”
Chamberlayne added that he still continues to follow Kingspan and see how it approaches these new risk factors. “It may be the case that we will invest again if we like the investment case,” he added.
Long term, he said: “I think the stars are aligning for just a fabulously exciting decade.”
As governments focus on climate change and sustainability issues with committed support to certain sectors, such as green infrastructure, this could benefit the fund.
“Clearly the stars are aligning for an incredible globally synchronised investment boom in a lot of the areas that we look at. That's quite exciting. And we've definitely got exposure to that in the stocks that we've got in our portfolio. So for our three to five year outlook, I'm pretty excited,” Chamberlayne said.
“This is going to be the decade of electric vehicles. You’re going to see a huge increase in renewable investment this decade again. Lots of digitalisation, connectivity, we've got bags of exposure to this stuff. I'm excited about that.”
Over the past five years Janus Henderson Global Sustainable Equity has made a total return of 131.99 per cent, outperforming both the MSCI World benchmark and the IA Global sector.
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
It has an ongoing charges figure (OCF) of 0.85 per cent.