15 May Genus Weekly In Focus – Addressing COVID-19 Concerns Week-9
As we go through these unprecedented times, we want to ensure that we continue to provide you with up to date information. In this week’s segment, Mike Thiessen (partner and director of sustainability) and Leslie Cliff, go in-depth on our Genus Fossil Free and Impact Funds and how the pandemic has impacted their performance.
Leslie Cliff: [00:00:00] Welcome, everybody. It’s Friday. It’s week nine. I have with me today, Mike Thiessen, Wayne’s getting an early start to the weekend. And we want to start using these Fridays to introduce some of our other team members. So you’ll see some other people on on the call. So, Mike, why don’t you introduce yourself?
Mike Thiessen: [00:00:23] Sure. So I’m the director of Sustainable Investments at Genus. I’m also a partner at Genus. I’ve been here for about three years. And prior to Genus, I was in the U.K. I had just finished an MBA at Cambridge and was working as a strategic consultant in London. I was really enjoying the work, working on a sustainable, finding sustainable solutions, work with banks and insurance companies. But my wife and I were looking for opportunities to move back home, because we just had our second child in London. I grew up in Abbotsford, we have a lot of our extended family out here and came across this great opportunity of Genus working in an area sustainable investing and impact investing that I’m very passionate about. And so I was able to get the job and have been with Genus for the past three years. Genus is very innovative when it comes to these areas along with quantitative finance, and we have a great team. So it’s been excellent.
Leslie Cliff: [00:01:21] Great. Well, I remember Mike interviewing you Zoom kind of situation, you were still at school. And we were pretty excited when we hung up to think we could get you. We’ve been, Genus has been in this business since 1992. I think I mentioned Carol Newell got us started down here. So we were really excited to find somebody with Mike’s passion and Mike’s education and just temperament to help us go forward.
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Leslie Cliff: [00:01:49] But before we get into, you know, impact fossil free, let’s just do a quick review of what happened in the markets this week.
Mike Thiessen: [00:01:57] Sure, yes. This week, the markets were down. They were down a bit over two percent. And this was largely due to Jay Powell of the Federal Reserve coming out this week, not being quite as optimistic in his talks, saying that that the U.S. economy might need some more stimulus in order to avoid any more long term negative effects of the economy, more unemployment. And so this is more of a negative tone than than what he’s taken in the past. And this week, there also was a proposal for a three trillion dollar stimulus bill in the States. But it looks like it probably won’t be passed. The voting is actually today, but a lot of Republican senators saying that they don’t think that it’s necessary. And even some Democrats saying that they don’t think that it should pass either. So and there have been some negative numbers this week. So a bit of a bit of a down ground on this week.
Leslie Cliff: [00:02:56] Great, will I? I always use the analogy of Humpty Dumpty when it comes to Jay Powell and his desire to not have an accident because of Humpty Dumpty falls off the wall. You can’t get him back up there. So that’s what that’s all about. So he’s he wants our help. He’s asking for help.I, we have two fossil free equity funds that eliminate the stocks we don’t want to own. But we also have a more innovative, more focused impact fund that only invests in the good guys, as outlined by the UN 17 Sustainable Goals, focusing almost big focus on climate change. So that’s my coolest. I think it’s very cool. And I just thought maybe you could tell us about some of the bigger holdings we have in there.
Mike Thiessen: [00:03:50] Sure. So right now in the fund, we we focused on holding companies that are providing solutions to big problems. So we have a lot of technology, a lot of health care and then industrials that are focused on energy efficiency or renewables. So we have companies like Vestas Wind that designs manufacturers, constructs wind turbines all around the world. I think it’s about 17 percent of the wind turbines around the world have been built by Vestas Wind. We also have companies like Vertex Pharmaceuticals. They they provide health solutions for a lot of major diseases around the world. They’ve actually performed quite well so far this year. Also, Citrix Systems, we have a large hotlink, Citrix Systems focuses on cloud computing and other energy efficient technologies. And as you would guess, they perform quite well this year, given businesses wanting to rely more on cloud computing. So those are some bigger holdings.
Leslie Cliff: [00:04:52] Performance has been good recently. But that’s not why I love it. I’ve loved it for the six years we’ve had it around just because it’s got a positive screen. And I think that’s the way to go. So Mike one of things that I find fascinating about the impact space is that there’s a judgment required. And for example, hydrogen is on the horizon as a really great technology to help us with emissions and carbon problem. So tell us a little bit about that.
Mike Thiessen: [00:05:30] Sure. Yeah. So hydrogen for decades has been seen as a fuel source that could really help us against climate change because hydrogen is burnt, then it just creates heat and water. So that seems great, but it has been really hard to make this big. Have hydrogen made economic sense basically, over the past few decades. But there’s more and more technologies that are coming out that make it better able to make hydrogen for for lower cost. Which is really attractive for a lot of energy companies. And Vancouver has actually been a hotspot for a lot of hydrogen innovation, just given that we’ve had Ballard Power here for a while. So a lot of ex employees and a lot of spin offs have been creating some very innovative technology that have been helping with these problems. And for Genus, we would love to invest in some hydrogen technology, but there aren’t a lot of public companies that are pure play focused on hydrogen. There are some like Ballard Power. But but really the value isn’t there, with the stocks right now. So our, our financial models don’t typically like them right now.
Leslie Cliff: [00:06:48] I think the point to the clients is that we monitor it and when we see an opportunity we will be there. I think that’s.
Mike Thiessen: [00:06:54] Exactly.
Leslie Cliff: [00:06:54] What they say.
Leslie Cliff: [00:06:57] So what I think’s important is we talk about our impact funding or fossil free funds is to remember that this is about 40 percent of our business. It’s not 100 percent of our business. So I’m going to ask Mike, no boats. Couple of stocks have been excluded. And I don’t want you to think that if you’re in or not on fossil free that they’ve been excluded. But, you know, we feel our clients feel strongly about also governance. And so, Mike, maybe tell us a little bit about Amazon and Facebook and why we why we don’t own them.
Mike Thiessen: [00:07:30] Yeah. So unfortunately for those ones, they haven’t passed our controversy screen. So they’ve had too many controversies around governance. And for Amazon, labor relations has been quite poor for working standards, safety standards, for Amazon, for especially the warehouse workers. And this has only been, you know, really blown up with the whole pandemic. With Facebook, there’s been a lot of data privacy issues. Of course, we’ve heard a lot of the big, big ones like Cambridge Analytica stuff, a few years ago. But there’s been more since then. So there’s governance plus other issues that make us not want to hold them in funds like this.
Leslie Cliff: [00:08:11] Right. So might do some French homework on the printer at work. I was told for this. Your kids are at home with you?
Mike Thiessen: [00:08:20] Yeah, exactly. Yeah. We’re doing homeschooling these days. My daughter’s in French Immersion. So one day I accidentally printed off some French worksheets and the work computer rather than my computer. But it happens craziness these days.
Leslie Cliff: [00:08:36] It’s so, so slowly, people getting back to the office. So Mike, might be in the office by maybe five of our 30 people will be in the office coming up. But we’ll slowly get back to work that way. But we’ve been very efficient, seamless. It’s been great. So I’m going to end it here and I’m going to say to you, isn’t it great? We’re getting more and more hugs. Dr Henry’s opening it up and we’re spending the weekend with our daughter and her family at Chris Beach. So I’m so excited and I hope everybody has a great weekend and we’ll talk to you next week.
[00:09:11] Thank you. Thank you.