Impax AM's pre-tax profits more than double despite fossil fuel outperformance

Impax Asset Management's pre-tax profit over six months to the end of March soared from £14.4m to £32.7m compared to the same time period last year, while its adjusted operating profit increased by 64% to £34m. 

The firm, which described its financial and business activity during the first half of the financial year as "solid", benefited from net inflows from investors of £2.5bn over six months, following the launch of new products, as well as increased investor demand across most of its existing range.

However, these inflows were offset by a £1.7bn fall in assets caused by investment performance, market movements and the impact of foreign exchange.

While eight out of ten of the firm's largest mandates beat their respective benchmarks over three years to the end of March, its Environmental Markets strategies suffered due to their ‘growth at a reasonable price' investment style, which fell out of favour during the second half of last year in favour of cyclical stocks and fossil fuel energy companies - to which Impax typically has no exposure.

Impax AUM exceeds £40bn at end of 2021

As such, Impax's Water fund lagged the MSCI All Country World index by 5.5%; Sustainable Food by 5.7%; Leaders by 7.9%; Specialists by 9.2%; and Climate strategy by 9.4%. And, while seven out of nine strategies with five-year track records also outperformed, Impax's Global Opportunities fund - which registered 36.6% of Impax's total net inflows and reached an AUM of £7.3bn - underperformed its MSCI ACWI benchmark by 4.8%.

The company's two fixed income mandates - the Core Bond and High Yield strategies - both performed broadly in line with their benchmarks, but its large-cap US fund underperformed the S&P 500 index by 2.5%, while its Asian Environmental mandate underperformed its MSCI AC AP Composite benchmark by 3.5%.

In terms of the business, however, revenue increased overall by 46% to £88.6m, while shareholders' equity in the business rose from £81m to £112.3m. Adjusted diluted earnings per share increased from 11.8p to 21.5p compared to H1 2021, while its interim dividend per share rose from 3.6p to 4.7p.

Ian Simm, CEO of Impax, said: "Our investment approach, with its careful attention to risk and resilience, continues to attract asset owners that are seeking to build robust portfolios with attractive returns, focused on the transition to a more sustainable economy.

"Amid considerable market volatility surrounding recent geopolitical events, we continue to be pleased with the long-term performance of our investment strategies."