"Throughout history we have seen examples of people identifying the trend early on, but that company not ultimately being the most commercially successful.”
David Harrison, who runs the Rathbone Greenbank Global Sustainability fund, remains a fan of electric vehicles as a theme, but is trying to focus away from the actual car manufacturers and instead focus on the companies that supply those businesses, as a way in which he can avoid the 'picking winners' problem.
Harrison adds another area that has become interesting is healthcare, as both the levels of public concern and the level of innovation in this area picks up, driving capital towards the sector.
For Jake Moeller, senior investment consultant at Square Mile, the present fall in share prices of some of the more established sustainable investment names represents an opportunity for investors to have a portfolio that is diversified across styles, something which has been difficult to achieve in recent years.
He said a previous problem for sustainable investors was that most of the investable companies were growth stocks and so took a battering this year as that style fell from favour.
But Moeller says many have fallen sufficiently far that they may now be considered value stocks, and so represent an opportunity.
Those themes are also of interest to Megan Brennan, co-portfolio manager of the Sarasin Tomorrow’s World Multi-Asset fund.
She says: “Sustainability itself is multi-faceted, with many different opportunities across a range of industries that an investor would want to own at different points in the economic cycle. Take two areas of investment we see as attractive: low-carbon building materials and healthcare companies.
"The macro-economic drivers for these two sectors are quite different; building materials tend to be highly correlated to the housing market and industrial production, whereas the demand for critical medical products are much less sensitive to the economic cycle, so a balanced, style agnostic, sustainable portfolio would blend investments across such sectors."
Brennan adds: "In sustainable multi-asset portfolios there are even more opportunities to capture diversified risk premia. Clearly the most challenging environment for sustainable investors is when the sectors that they choose to avoid, such as fossil fuel production and refining, are the best performers.
