Impax Asset Management has reported strong investment performance in 2013 for all its listed equity strategies and suggests that 2014 will be a bull year for environmental and sustainable markets.

London-listed environmental and resource friendly investment manager Impax Asset Management has reported strong investment performance in 2013 for all its listed equity strategies.

Yearly performance for the firm’s flagship investment trust Impax Environmental Markets reached 33.2 per cent growth, while the company’s other listed equity strategies had a minimum of 17.3 per cent growth in returns - its top performer IEM aside, the firm’s Leader Strategy reached an impressive 30.6 per cent result. As a result, the firm’s strategies outperformed its benchmark, the MSCI ACWI index.

“The drivers of our markets continue to strengthen, with significant news in science, policy and technology fuelling investor interest. In 2013 all our strategies performed very well compared to global equities and their respective environmental benchmarks,” said chief executive Ian Simm in a statement.

Looking ahead, the firm said that the ratchet of building regulations, energy efficiency standards and pollution limits continue to tighten. As such, the firm suggests that companies exposed to these themes will see their earnings start to rise strongly, particularly anticipating growth in sub-sectors such as water treatment, pollution control and energy efficiency.

“We expect emerging markets to continue to contribute to our top performing water strategy in 2014. Even in renewable energy – the one sub-sector most assumed to rely upon government-directed subsidies and an elusive, international climate change agreement – the picture is finally starting to brighten. The policy uncertainty of recent years that has blighted renewables investment is becoming clearer and substantial consolidation has improved equipment makers’ pricing power,” the firm said.

Cyclical recovery boosting environmental and sustainable markets

Additionally, the firm noted that it continues to remain more cautious of ‘blue-sky’ opportunities, such as fuel cells, energy storage, second-generation biofuels and electric vehicles.

“There are undoubtedly companies in our investment universe that will enjoy enormous success bringing these technologies to market, or will be acquired at attractive valuations along the way. However, we prefer established business models, where we have good visibility over the future earnings that will drive performance. That’s why we didn’t catch a lift with Tesla on its rollercoaster ride,” Impax said.

Consequently, Simm said the outlook for 2014 is looking increasingly positive for the sustainable and environmental investments sector.

“It’s been a long time since the outlook for environmental markets and resource efficiency stocks has been quite as good as it is right now. The next 12 months look promising across all our investment strategies, buoyed by a broad-based cyclical recovery from the deepest downturn in living memory,” Simm concluded.

As at 31 December, 2013, the firm managed around £2.4 billion for investors globally across listed and private equity strategies.