Global EcoTrends has survived first year wounded but intact

Allianz Global Investors' fund manager Bozena Jankowska is the first to admit 2008 was a tough year.

But it was also the year pegged for the UK launch of Allianz GI's Global EcoTrends fund.

As the UK side of the fund celebrates its first birthday, Jankowska is counting the wounds, but staying cautiously optimistic.

"We were not pleased the fund suffered as much as it did but our focus is on making up for it as much as possible to get it back on track.

"My philosophy is, if you can survive this you can survive anything. Now, can it get any worse? I never say never but it is also a fantastic learning opportunity," she says.

Despite the fact the fund faced some setbacks throughout its first steps Jankowska is acutely tuned to the murmurings in government stimulus packages that point, not to a waning interest in the environment, but a decisive push for a continued focus on it.

She says: "If you think about what has been announced in the US, China and European stimulus packages, the environment is a strong feature of all three. You would automatically assume things like climate change and the environment would push into the back of governments' minds but from what we have seen, the opposite is happening. It indicates the interest and enthusiasm for clean technology is not going away."

Although Jankowska says the fund has done worse than she wanted, it has not performed dreadfully in recent months.

Morningstar data shows its three-month performance to 2 February as being up 7%, compared with the sector average of 4%. It currently ranks 44 out of 188 in the Global Growth category.

However, on a six-month viewpoint to the end of November 2008, the fund drops to -39.2% compared with the sector average of -28.8%.

As such, Jankowska is aiming for greater things as the fund moves into year two.

"I am hoping to maintain it, if not do better. Even though we had a really tough year in 2008, the fund flows remain pretty stable, which is testament to the fact people see it as a long-term investment," she adds.

Currently Jankowska is positioning the fund defensively, decreasing its holdings in solar power and increasing the amount of cash it has.

"We are monitoring and evaluating the markets so once things start easing we are ready to put that money to work," she says.

Jankowska points to the fact credit markets thawing will create a strong catalyst for growth in alternative energy; and, once President Barack Obama's stimulus package is decided on, the fund will be ready to move.

"Once we get clarity on where that spend is going to go, that will provide us with positive sentiment for the remainder of 2009, and especially into 2010 and 2011," she adds.

But it is not only governmental investments into green infrastructure that will likely have an effect.

It is also investor desire for environmentally friendly funds that will help EcoTrends succeed in the future, she says, pointing to a recent study undertaken by Allianz GI. In it, the company surveyed US citizens, with more than £100,000 to invest, on whether their appetite is still there for environmental issues.

Rather than finding green issues to be a trend of the past, the company was surprised to see great enthusiasm still exists.

"It is extremely encouraging that even in the current environment, when people have so much else to worry about, they are still interested in it," she adds.

Global investor attitude is important to the fund as it invests in a wide range of companies from around the world from solar and wind power, to public transport. Jankowska says this allows the fund to choose both high beta and defensive funds to get a comfortable mix of risk.

"A lot of these companies are not niche, clean tech, wacky kinds of stocks. Instead there are a lot that are very established businesses with leverage into clean technology," she says.

Jankowska highlights companies like Arriva as being a company one might not traditionally think of as being "green" but which fall into the investment portfolio because the outcome of its company - public transport - is ecologically friendly.

"That is the most efficient way of moving large amounts of people with the lowest carbon footprint," she adds.

Other companies she is putting in the key stockpick pile include the wind energy stock Vestas, defensive waste management companies and those that are geared into re-building a greener hydro infrastructure in Europe, like Andritz.

However, the company has massively divested itself of solar power stocks, which saw a tumultuous 2008 and which Jankowska expects to see worsen in 2009. This, she says, comes from a few reasons.

Firstly, increasing numbers of companies are sprouting up, coming under what Jankowska calls the "me-too" category. That increase in supply is pushing price down.

Added to this is Spain's recent cap on how much money is being put into solar power. As the major player in the solar market, this move has "put an end to the boom in solar," she says.

Finally, she believes the demand in Germany - which is the biggest market - is also likely to decrease as people become more worried about keeping their jobs than splashing out for eco-refits.

This has all resulted in the fund decreasing its holdings in eco-energy to 45% from the 65% it held last year, she explains.

These shifts will continue throughout the turbulent year, she says, aided by the fund's access to research from sister company RCM's global platform of 68 sector analysts and the use of research from Grassroots.

"It provides an advantage and to the best of our knowledge I do not think there is a network like that anywhere else," she adds.

It is currently undertaking a new study with partners looking at the development of wind and solar energy worldwide and the increase in smart-metering in the US, all of which aids Jankowska's ability to best manage the fund from a global perspective.

And, through the highs and lows, Jankowska says she stays committed to the area after having a lifelong dedication to the environment.

"It is something I am personally passionate about so being able to look into it on a daily basis, what more could I ask for?" she concludes.