Wafa Ahmadi (CPR AM): “Hydrogen is one of the few thematic investments with ‘price’ bias, not ‘growth'”

Wafa Ahmadi is the Director of Thematic Equities at CPR AM, the thematic investment center of French manager Amundi and which brings together €64 billion under management. Among his best-known funds are CPR Investment Educationthat invests in the entire educational ecosystem, and cpr invest hydrogen, who saw the light last december, Go to the special portal L’Economista Sustainable Investment and ESG.

Which part of the assets already managed by CPR AM is ‘Article 8’ or ‘Article 9’ as per the European Disclosure Regulations, which is durable and ‘impact’?

majority. In the thematic category, more than 90% are.

Is it almost ‘natural’ to make ESG investments through thematic funds?

is not the same. You can be thematic and not ESG, and you can be ESG and not thematic. But we have learned the interesting lesson that thematic funds are identified by investors as the main vehicles of ESG Vector. There was some kind of convergence between the two long ago. In our case, as thematic investors, 80% inflow, Or maybe a little bit more, go to our ESG fund. This is a main factor.

Of the 64,000 million euros under management in CPR, what is the subject investment?

About 23,000 million, a third, approx.

How has that number increased?

On Large scale. We started 2015 with $3.8 billion and have been successful in launching innovative funds. We were the first in the world to start an education fund, to start another for social equality…

“Only companies that score better than the average of their countries enter our social fund. A company that is egalitarian in India will not suffice in Sweden”

Now, that subject share is one-third of the assets. How much do you expect it to grow?

It’s hard to say, but thematic values ​​have been most dynamic within the business side. equity, I think I remember, although I’m not sure if in 2016 or 2017 equities The subject as a whole was barely 3% of global values. After two years they were 6%. The figure doubled and continues to grow very rapidly. On the other hand, the thematic investment industry has done a great job in terms of performance: It has been successful in beating the market except in 2021.

You said that CPR started the first social fund. in what year?

About three years ago at the end of 2019. It has a little over 400 million under management. about this CPR Investing Social Impact. Find your investment fund here.

What kind of companies are in your portfolio?

Virtuous companies in terms of practices in equality. To select them, we define what inequality is, because you and I may have different views. We considered what would be the threshold of acceptance of equality or inequality. We may or may not be equal in terms of pay, diversity, access to health and education, or human rights. In CPR we established five pillars, and compared the practices of 3,300 companies, MSCI ACWI’s universe. In each of these columns, we exclude companies that are in the bottom 10%, and select only those that score better than their countries (that is, they do more than their countries offer, on average). . A company may be egalitarian in India, but it will not be egalitarian enough in Sweden, which is a more egalitarian country. This is how we reduced the universe from 3,300 companies to over 700.

Can you tell me a little more about either of those columns?

With regard to remuneration, we see: CEO Salary Ratio, which is the CEO’s salary divided by the company’s average salary. And above a certain level, we don’t invest. In some companies in the United States it can be as high as 300 times. We have about 10, 20 or 50 times the companies in Europe. ALSO READ: The social ‘leg’ will set the pace for sustainable investment in 2022 and 2023.

Beyond your own metrics, do you use data from third-party providers?

yes of course. It is impossible to do it yourself. It’s something I’m very proud of. Regarding education statistics [para seleccionar empresas para su fondo CPR Invest Education] no data available. And I, when I start an education fund, I have to be able to show you, if you give me 1,000 euros, what effect those 1,000 euros have had on the world of education. And there were no data available to do so. We write to all companies and collect that information. If you invest those 1,000 euros in this fund, I will send you a 24-page impact report at the end of the year telling you that with your money we will be able to secure 63 hours of 80% teaching in emerging markets Were. It didn’t exist. In addition, we have a number of different databases that are essential to know CO2 emissions or the water footprint of companies, among many other issues.

You mentioned Impact Investment, which is increasing every year.

ESG is already Mainstream, It seems correct. You have to demand with him: you can’t do that green washingYou’ve already seen what happens to companies that do this. What we’re working on and where we’re headed is impact investing.

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How is an impact investment recognized?

For us, it has to satisfy three conditions. It must be intentional (you need it, it can’t be an accident). Its positive impact on the environment or society should be measurable. And third: it should introduce redundancy. This means that the more money you invest, the more impact you generate. You can make a positive impact on something if you meet these three conditions. Then you can say that you are more vulnerable to the problem of homelessness, or the fight against cancer, or the eradication of plastics in the oceans.

When we talk about thematic investing, do we talk more about ‘growth’ or ‘value’ companies?

of growth, Investing in trends basically says that, beyond the day-to-day life of the markets, there are trends that shape our lives, such as climate change or aging. Those are visible long-term trends, and I propose to capture that. growth, convert it into display and deliver it to the customers. So the biggest bias of most thematic funds is growth, because we are incorporating that growth. But there are exceptions, not many, but there are. We recently launched a hydrogen fund. If we are looking for a net carbon economy in 2050, there are solutions. Hydrogen is one of them, it’s one of the few ways we can produce CO2, because it’s basically water; When you burn hydrogen, the result is water. Hydrogen is a solution that’s still getting started defeat On Large scale. Europe is investing in it in a big way, America will, Asia has started, China is already there. we have to catch that trend, and hydrogen is value, His rating is not that high. Therefore our fund, cpr investment hydrogenFor example, MSCIs show lower valuations than ACWIs. Invest in green hydrogen without being a millionaire like Amancio Ortega.

In your education background, what kind of companies can we find?

Schools and universities, provided they are listed, student service companies. What we do is ask ourselves what a student needs. For example, a student living in a remote village in Peru or the Philippines had two options after finishing high school: move to a bigger city for more advanced education, or stop studying. This has changed a lot, especially during the pandemic. Many countries give you the possibility to follow basic courses in mathematics, architecture, literature… through learning platforms. 20 years ago you bought books for university, and at the end of the course, at best, you sold them, or you threw them away. Now that has changed, you can make your book available through a one-year subscription, and it costs you 4 euros, not 50 euros. So the universe extends from educational institutions to education related services and technology. In the beginning, three years ago, we identified about 200 companies, and now it will be 230 or 240.

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Do these funds have a regional bias?

Hydrogen refers to regions that have already developed these solutions: the most advanced are Europe and Asia. The US is holding on through the patent, but they had cheap oil and so they didn’t feel right away, we did. So the universe of wealth is heavily skewed to Europe and Asia. social impact fund Europe is also over-represented in this, as some countries in the old continent stand out in terms of equality on a global scale. The opposite is the case with the Education Fund: Europe is under-represented, as education is something that is, for the most part, in the hands of governments. The fund is more biased towards the US, Latin America and Asia.

Is it possible to make a good ESG investment through passive investing?

Yes, there is no contradiction between passive management and ESG. There has been a huge change. When I started managing the fund, sometime back in 1997, it was all about performance, performance, is no more performance If it is not sustainable. 25 years ago our fiduciary duty was about performance. Now we have to do the same, but in a permanent framework.


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