DECALIA Asset Management innovates by launching DECALIA Circular Economy, the first equity investment fund dedicated to the circular economy. After launching DECALIA Millennials and DECALIA Silver Generation, DECALIA continues to develop strategies focusing on changes in consumer trends.
From the linear approach to the circular economy
In Nature, matter is transformed and flows in a circular cycle that can be perpetuated ad infinitum. Conversely, our civilization functions with a linear approach in which we draw on a finite stock of raw materials and energy to make goods and services that we then throw away, generating often-toxic waste in an unbridled wastage of resources. This model is obviously not sustainable in the long term.
The circular economy looks at all the options across the value chain. It makes it possible to break out of this deadlock by designing from the outset products that are easy to dismantle and recycle after use and by giving preference to rental and the right to use rather than ownership, while relying on renewable energies. Initiated about ten years ago, this movement has now reached the public at large and should become a major trend over the coming decades. Indeed, it offers many benefits in terms of environmental impact, resource-saving, cost-cutting and economic growth (+7% of GDP in 2030). This major change in our economic and cultural model will foster the emergence of new business models and create substantial opportunities for the companies able to respond to this trend.
A specific investment strategy
DECALIA’s investment team worked for over a year to develop a strategy suited to this theme. It defined 8 proprietary sectors: the sharing economy and platform-as-a-service, prevention and diagnostics, nutrition, renewable energy and smart grid, waste and recycling, water management, smart & green materials and Industry 4.0. The investment universe thus comprises about 580 companies worldwide, including 215 in the USA, 165 in Europe, 90 in Japan and 110 in other countries. The DECALIA Circular Economy fund, which is very actively managed (the active share is estimated at 93%), should number around 70 positions, with 25 stronger convictions. Favouring “pure plays”, it will be naturally biased to the smallest capitalizations. The fund is managed by the team focusing on changes in Consumer Trends led by Clément Maclou. The fund, which is a sub-fund of the Luxembourg SICAV UCITS DECALIA, is currently reserved for qualified investors but will shortly be registered in Switzerland and several European countries.
“After many months’ work, our team of analysts developed a strategy whose results appear to be very conclusive. Indeed, with a gain of +74.9% between February 2015 and April 2018 compared to +29.4% for the MSCI World index, this investment universe has outperformed significantly and thus confirms the benefits of this theme”, said Rodolfo De Benedetti, Partner and Head of Product Strategy Development at DECALIA.
“This new circular-economy fund complements our Millennials and Silver Generation strategies and underscores our strong commitment to changing consumer trends. These are profound paradigm shifts that have a lasting impact on the global economy,” said Xavier Guillon, Partner and Head of DECALIA funds.
“The investment process is based on the approach that has proved itself for the Millennials and Silver Generation strategies, while being adjusted to the specific problems of the circular economy,” explained Clément Maclou, leading the Consumer Trends team.