Ethical Investment Feb 23 Report

Market Update

Major equity indices had a mixed performance in February with US CPI easing for the seventh consecutive month to 6.4% in January. However US Core PCE price index, which is the Federal Reserve's preferred measure of inflation, rose by 4.7% annually in January, up from the 4.6% increase in December. The employment report in January, showed non-farm payrolls increased by 517,000, above forecasts of 187,000. Bond yields in US and Australia rose as investors digested the stronger than expected macroeconomic data.

In the US, the S&P 500 Total Return Index returned -2.4% over the month, and in Australia, the S&P/ASX 300 Index returned -2.5%.

Webinar on Sustainable Investments

We recently gave a presentation, discussing sustainable investing and our impactful investment strategy focused on high quality innovative companies. A replay can be found below.

Portfolio Snapshot

During the month, the Fund returned 5.5% by investing in high-quality Global growth companies that are making a positive impact on the United Nations Sustainable Development Goals. Our portfolio companies, typically have global operations and are making an impact around the world.

Our portfolio companies also have industry leading business practices and are facilitating the transition to a more sustainable future through their investments and internal policies. They have taken initiatives to address important issues such as inequality and climate change within their respective organisations.

Portfolio News

Shopify

Shopify, a company that provides essential internet infrastructure for commerce, reported a 26% growth in revenue for Q4 2022 compared to the same quarter in the previous year. Their gross merchandise volume (GMV) for the quarter exceeded $60 billion and $197 billion for the full year of 2022. This year, Shopify focused on simplifying commerce operations for merchants, launching new products to power the future of commerce and bringing more merchants of all sizes onto its commerce platform.

We are invested in Shopify because of their unwavering support for small businesses. With Shopify's platform, small businesses have access to the tools they need to grow and succeed and promote local economic development and job creation. Moreover, Shopify is committed to social responsibility, taking steps to address issues such as climate change, diversity, and inclusion. The company has set a goal to become carbon neutral by 2030 and has implemented a number of initiatives to support small business owners from diverse backgrounds.

Dexcom

Dexcom, a medical device company that designs, develops, and commercialises continuous glucose monitoring (CGM) systems for diabetes management reported its financial results for the quarter and fiscal year ending December 31, 2022. The company's revenue grew by 17% to $815.2 million in Q4 2022 compared to the same quarter in 2021, with US revenue growth of 17% and international revenue growth of 15%.

For the full year 2022, revenue grew by 19% to $2.91 billion, with U.S. revenue growth of 16% and international revenue growth of 28%. Dexcom also received FDA clearance for its Dexcom G7 CGM system for people with diabetes ages two years and older.

The company expects revenue for 2023 to be between $3.5 billion and $3.6 billion, which would represent a growth rate of approximately 20% on an organic basis. The company also expects its GAAP operating margin to be approximately 14%, and its non-GAAP operating margin to be approximately 18% to 19%.

We are excited about the long-term growth prospects and positive impacts on society of both companies, and we remain invested in them.

This note has been prepared by ELM Responsible Investments (‘ELMRI’) ABN 70 607 177 711 AFSL 520428, for Australian wholesale clients for the purposes of section 761G of the Corporations Act 2001 (Cth).

The information is not intended for general distribution or publication and must be retained in a confidential manner. Information contained herein consists of confidential proprietary information constituting the sole property of ELMRI and its investment activities; its use is restricted accordingly.

This note is for general informational purposes only and does not purport to be comprehensive or to give advice. The views expressed are the views of the writer at the time of preparation and presenting and all forecasts, assumptions, opinions, data and other information are not warranted as to accuracy or completeness and are subject to change without notice. This is not an offer document and does not constitute an offer or invitation of investment recommendation to distribute or purchase securities, shares, units or other interests to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this note. Any potential investor should consider their own circumstances and seek professional advice.

ELMRI funds, its directors, employees, representatives and associates may have an interest in the named securities.

Past performance is for illustrative purposes only and is not indicative of future performance.