PICTET NUTRITION FUND: £1.6bn fund gives investors food for thought

Fund Pictet Nutrition is an unusual investment vehicle, aimed at earning money for investors from a portfolio of companies involved in sustainable food production.

While the £1.6bn investment fund has not been immune to the negative impact of falling stock markets on investor returns, manager Mayssa Al Midani is confident his focus on such a strong investment theme will deliver compelling long-term returns. Last year, the fund posted a loss of 10 percent, compared to a five-year return of 26 percent.

Midani, from Switzerland, says the fund is investing in the future of food – ‘everything from farm to fork’. The focus, she adds, is on identifying companies that make it possible to produce food in a more environmentally friendly way. “It’s all about investing in companies that provide solutions, whether it’s fighting malnutrition, obesity or protecting the planet from environmental destruction.”

Midani says some statistics on food production are ‘terrifying’ – a third of all food is wasted, for example; one in five deaths worldwide is due to poor nutrition; more than two billion people worldwide are overweight or obese; while food production will have to grow by 60 percent between now and 2030 to meet a growing population.

She says there are only 200 stocks worldwide that meet the strict investment criteria. Companies involved in the production of beef, alcohol, confectionery, plastic packaging (for food companies), and synthetic fertilizers and pesticides are routinely excluded.

The result is a portfolio of 50 stocks, primarily listed in the United States or across Europe. It only selects companies for the fund that are attractively priced and backed by sound management. Most are involved in key areas such as providing food waste solutions, ethical farming and plant-based foods. The fund’s largest holdings include US-listed Deere – the world’s largest producer of agricultural products – and US-based food waste management company Darling Ingredients.

Another top ten holding company is the Dutch food product specialist DSM, a world leader in plant-based food alternatives and a producer of specialized animal feed ingredients for livestock that offer an alternative to antibiotics.

Only one UK-listed company, caterer Compass, is part of Pictet’s portfolio, while the only Chinese company held in the fund is dairy company China Mengniu. “Dairy consumption is low in China,” says Midani, “so the opportunities for growth in the business are huge.”

Midani runs the fund together with Alex Howson. The two managers can also draw on the expertise of an ‘advisory board’ composed of specialists in molecular biology, food technology, systems and international trade.

Pictet is a specialist in theme investment funds. It has been managing such portfolios since 1995 on themes such as water, health, robotics, security, clean energy and wood.

In total, the fund manages £190 billion in assets, but it’s not alone in seeing food as an attractive long-term investment opportunity. Rival funds include Barings Global Agriculture, BlackRock Nutrition, Sarasin Food & Agricultural Opportunities and Liontrust Sustainable Future Global Growth.

Pictet Nutrition has an annual fee of 1.12 percent and the fund can be purchased through most investment platforms. With such a specialist focus, it should only make up a small portion of an overall investment portfolio.