THE WS EPWORTH MULTI ASSET FUND (MAF)

Hoya is a Japanese optics technology business focused on health applications, that is held as a conviction stock in the WS Epworth Global Equity Fund. A key part of the business is glasses and contact lenses, but the business also develops endoscopes, metallic orthopaedic implants, intraocular lenses, and other medical accessories.

A combination of ageing populations, a growing middle-class in developing economies and improved access to health care are driving significant demand for these products, in addition to the ongoing need for research and development to improve existing healthcare provision, as well as provide new solutions to improve wellbeing. There is also a growing focus on preventative medicine to cut health spending burdens caused by subsequent illnesses, which Hoya’s endoscopes help to address.

BioGaia is a global leader in the research and development of probiotics, based out of Sweden. The aim of probiotics is to cultivate a healthy culture of microorganisms (healthy bacteria) within the body. BioGaia focuses specifically on gut, oral and bone health in both infants and adults under the L.reuteri bacteria strain.

BioGaia has been a conviction stock in the Epworth Global Equity Fund since 2019, and since then the stock price has appreciated over 60% (as of March 2024), representing a significant positive return for Epworth. It was added due to the growth characteristics it displays through its market-leading position in a sector with strong growth prospects as more and more people, globally, become conscious of their health and improving their standard of life. Inherently, investing in BioGaia also directly aligns with the Health & Wellbeing investment pillar at Epworth.

Alongside its strong performance, BioGaia is also a company with an equally strong moral compass and has driven sustainability in the sector. Some of the projects they have underway include goals such as using 100% recycled or biodegradable packaging by 2030 – something no-one else is doing in the sector due to the complexities of shipping medical products. The company is also participating in a worldwide initiative to prevent the resistance of antibiotics; and engaging in charitable work to provide proper healthcare for vulnerable women and children in the Philippines.

Recent engagement with the CEO of BioGaia, made it clear to Epworth that BioGaia is committed to improving public health and reducing the environmental impact of their activities. The management of BioGaia are strong believers that improving health requires a change at both a personal and societal level, to benefit people, society and the environment. This is reflected by the appointment of a dedicated sustainability officer and team in 2022.

Fairer Finance
An example of Epworth’s shareholder activism is reflected in some of its holdings in the UK financial services sector. Epworth’s parent organization, the Central Finance Board of the Methodist Church, is a Living Wage Accredited Employer, and Epworth regular engages with businesses, both directly and through collaborations, to encourage them to seek independent verification that they pay their staff a fair wage.

Epworth has two conviction holdings in the UK financial sector, wealth manager Brooks Macdonald and investment platform provider IntegraFin. Epworth selected these business because although they are far from the biggest operators in their respective markets, their efficient operating models and targeted approach results in industry leading profit margins, good customer service and strong organic growth. Both benefit from structural growth trends and trade on reasonable valuations whilst offering compelling returns on capital, which are the key criteria Epworth’s investment team seek in an investment.

Epworth has met regularly with the management of both companies since its shareholdings were established, pushing for both to improve their approach and disclosure around social responsibility and sustainability. One of the areas of success from these engagements is that Epworth has successfully persuaded both businesses to become Living Wage accredited employers.

Whilst pay in the finance sector is traditionally above the national average, this accreditation requires that contracted catering, cleaning and security staff are included. Epworth feel that the need for fair pay has taken on even greater significance in the cost of living crisis, and well run businesses can help tackle this issue at minimal additional cost to their own shareholders. It is fantastic that both businesses have responded positively to these engagements, and Epworth will continue to push for further positive changes from these and its other investments.

One of Epworth’s ethical pillars is Earth & Ecosystem, describing our investment approach seeking solutions to the challenges facing our planet. Part of this involves investment in the construction industry, which is responsible for around 15% of global emissions and increasingly scrutinised for its use of carbon-intensive materials. Epworth invests in multiple companies looking providing solutions to this issue.

One example is US company Autodesk, a leader in creating software used by architects, engineers, and construction professionals. Their programs allow designers to create detailed digital models of buildings before they’re constructed. This technology helps reduce the environmental impact of buildings in several ways

• Improved efficiency by simulating how buildings will use energy, helping designers create structures that require less energy to operate.
• The software also helps in minimising waste by allowing builders to plan more accurately, reducing the materials needed.
  
  

Autodesk is enabling the construction industry to build smarter, more energy-efficient buildings, which in turn helps reduce carbon emissions.

By investing in Autodesk and other companies offering solutions for a sustainable future, Epworth’s clients are helping to drive positive change for both people and planet.