Chris Sparks reports on two investment funds that offer better returns than leaving cash on deposit

Ireland’s central role in the global funds industry is illustrated by the iShares Developed World Index Fund, which has a current total fund size of c.$16bn. The fund manager is BlackRock Asset Management Ireland Ltd, and the depositary of the fund is J.P. Morgan Bank (Ireland) plc.

The fund, established in 2011, invests in equities that make up the MSCI World Index. It is heavily skewed to the US market, with American stocks making up around two-thirds of the fund value. The next largest exposure is to Japanese stocks (6.8%), and UK exposure is limited to 4.1%.

The minimum investment directly into the iShares behemoth is £1m, though less flush investors can join the action through funds that invest in the iShares fund. Zurich’s Indexed Global Equity Fund currently invests in the iShares Developed World Index Fund, and the Zurich fund size at the end of August 2021 was €174m.

The Indexed Global Equity Fund performance largely mirrors the US bull market over the past decade. On a 10-year view, annualised performance pre-charges has been 14.3%.

Through the first eight months of 2021, the fund gained 22.7% in value. According to Zurich, the top ten holdings in the fund are Apple, Microsoft, Amazon, Facebook, Alphabet, Tesla, NVIDIA, JP Morgan Chase and Johnson & Johnson. BlackRock says 96% of its iShares fund is invested in companies with a market cap exceeding $10bn.

In Association with

US markets hit a buffer in September and started to recover lost ground in October. Pessimism about inflation and potential interest rate rises has increased, with annual US consumer price inflation increasing to 5.4% in September, the fifth consecutive month of annual increases of 5% or more.

Innovator Fund Has Sustainability Focus

Dublin boutique investment manager KBI Global Investors, owned by French giant Credit Agricole, has had a focus on sustainability themes long before ESG became fashionable. The long-term secular trends that KBI believes offer attractive investment opportunities are:

• the spiralling global demand for scarce resources such as food, energy, water, and commodities.

• the need for the global economy to adapt to reduce carbon emissions.

• the impact of population growth, urbanisation and emergence of new consumers in developing economies.

The KBIGI Innovator Fund, launched five year ago, invests in companies active in energy solutions, particularly renewable energy and energy efficiency; companies active in the water sector; agribusiness companies, from producers to large scale farms; and companies operating in emerging markets. Additionally, the Innovator Fund has commodities exposure for diversification.

Assets under management are c.€65m, with investment deployed in stocks such as Veolia, Iberdrola, National Grid, First Solar Inc, Greencoat Renewables, and United Utilities Group.

Also in the portfolio is Andritz, the Austrian group that makes equipment, systems and services for the pulp and paper industry, the hydropower sector, pumps and solid/liquid separation in the municipal and industrial sectors, as well as animal feed and biomass pelleting. It’s not a stock many Irish investors are familiar with, and the share price has advanced 27% year-to-date.

New Ireland offers the Innovator Fund to retail investors, and on a 5-year view pre-charges annualised performance has been 12.9%.