Many people dislike the way things are done in their industry but rarely do they have the ability to do anything about it. But Clare Brook, joint founder of WHEB Asset Management, is one of the few who have been able to tackle some of the shortcomings in their area of expertise.
Brook’s first encounter with finance was working as a translator in a French bank in Paris. Having moved to the city as a graduate, she took the job to live but soon found she was enjoying the work.
“I read history at university so did not have any understanding of finance at all but I found there was much more to financial analysis than I had anticipated. The fact that this incredible amount of thought was going into analysing companies struck me as interesting.
An analyst role on the Jupiter ecology fund tempted her back to London due to her new-found interest in financial analysis and an opportunity to help tackle environmental problems.
“I had been pretty motivated at university by social and environmental causes. This job seemed to combine the rigour and intellect of financial analysis with the ideology of environmentalism.”
After landing the job, Brook carved out a successful career working for some of the UK’s biggest asset managers. She led socially responsible investment teams at NPI and then Morley, building up both companies’ funds from scratch to £1bn of assets within five years.
However, she says many of the existing funds have drifted away from their initial purpose. “The SRI industry had developed and done extremely well but had become, in many cases, increasingly mainstream. Typical holdings of your average SRI fund were large banks, supermarkets and telecoms. Some of them even had oil companies in their top 10 holdings.”
Brook, together with co-founder and joint investment manager Nicola Donnelly, decided there was room for a more focused approach. Brook and Donnelly first met in 2000 when Donnelly was researching SRI and stayed in touch when Donnelly moved into the industry full-time. By 2007, they had both started talking about setting up a business themselves and in 2008, in partnership with WHEB LLP, they established WHEB Asset Management. The WHEB Sustainability fund launched in June 2009.
Brook says: “We felt there was room for a much more pure and focused approach to socially responsible investing.”
However, she says the concentrated risk involved in a pure climate change technology fund was not the answer: “It was fine when the market was doing well but suffered when it came off.”
The answer for Brook and Donnelly was to develop a fund with three key themes – climate change technology and renewable energy, water shortage technology and demographics. This combination aims to allow the fund to capitalise on three of the biggest issues that will affect the entire planet in coming decades. Just as important, Brook says the spread of sectors also gives the fund a more balanced spread of investment risk.
“By having these three themes, we have got quite aggressive, high-risk but also high-reward exposure to renewable energy stocks at one end of the fund. At the other end, we have relatively defensive healthcare stocks linked to our demographics’ theme.
“We are not just looking for the most socially responsible bank or supermarket. We are sticking to companies that are solution providers, without exposing investors to huge volatility.”
Brook says despite her background and investing in technology that could help solve three of the biggest problems facing the Earth, the fund is not an ethical one – at least not in the conventional sense.
“Typical ethical investment works by looking at the whole FTSE All-Share and saying, we don’t want to be involved in companies that have nuclear power, tobacco, pornography or animal testing, and any company involved in that area will be struck off the list. We are all about looking at companies in terms of what they are positively doing in terms of providing solutions.
“This fund is for investors who are putting in a long-term investment or a pension fund that will mature in maybe 10, 15, 20 years time, and we are trying to think how the world will look then and what will the key challenges facing the world be then? The really serious challenges – not whether someone is doing a bit of animal testing but life and planet-threatening challenges. We look for which companies are addressing those challenges best and those are the ones we will invest in.”
The long-term future of investing in the fund’s three themes is also partly determined by politics and Brook expresses frustration with political wrangling. She says the climate change conference in Copenhagen in December was disappointing but she is more concerned about the growing weight given to climate change sceptics by the media, a result of which she feels public perception of the validity of climate change is being damaged.
Regulatory change is ticking over and, more important, commercial companies are seeing opportunities and are continuing to develop these specialist markets.
“The market does what it needs to do and governments generally play a game of catch-up. They are not setting the agenda, certainly not in the UK.”
She has big hopes for the potential for growth. The fund has £15m of assets under management but she plans to grow this to £250m.
“We would definitely like to get up to a quarter of a billion over five years and take it from there. In previous roles, my team and I have grown assets under management to £1bn in five or six years. Obviously, that is with a bigger distribution network but we have high hopes for the potential of this fund.”
Born: Copenhagen, 1966
Lives: North London
Education: Haverstock Comprehensive, Chalk Farm; Westminster School; University of Oxford: BA (Hons) History
Career: 2008-present: managing partner, WHEB Asset Management; 2000-07: head of SRI, Morley (now Aviva); 1999-2000: Henderson; 1994-99: manager of Global Care funds, NPI; 1990: analyst, Ecology fund, Jupiter
Likes: Playing with my children, singing, hill walking, people who make me laugh
Dislikes: Urban 4x4s, badly tuned radios, breathing exhaust fumes, liver
Drives: A bicycle
Book: Middlemarch by George Eliot
Film: The Lives of Others
Album: The Boatman’s Call by Nick Cave and the Bad Seeds
Career ambition: To make WHEB Asset Management a huge success
Life ambition: To learn to wolf-whistle and be able to complete The Times crossword
If I wasn’t doing this I would be…Spending more time with my children