You started the Mandarine Global Sport fund a year and a half ago. Why this theme?
sports economy It has experienced strong expansion in recent years, its growth is estimated at +6 / +7 per year for the next five years. Several factors explain this dynamic: increased awareness of well-being and health, the diversification and expansion of sports populations (aging, feminisation), the rise of middle classes accessing the practice of sports, especially in developing countries. At the same time, digitalization trends and technological innovations enable new sports applications and expand the addressable market on a global scale. Using our knowledge of companies as a stock aggregator, we decided to launch the Mandarine Global Sport fund to gain exposure to this economy and search for the best players in the industry in our opinion.
We exclude professional football clubs and any activity exposed to money laundering risk and sports practices that use firearms.
What is the investment strategy and how do you incorporate ESG into it?
Mandarine Global Sport is a global equity fund. We’ve built our investment universe around four diversified and weakly related segments: sports performance (food hygiene, connected hours), sports equipment and supplies, infrastructure and organizations (stadiums, gyms, sponsorship and events), and digital consumption (e-sports, media, audiovisual). Identified companies have to generate more than 30% of their turnover from sports, but in reality this figure is over 50% for 90% of the companies in the portfolio.
A proprietary filter based on extra financial criteria then makes it possible to screen out companies with the lowest ratings. ESG criteria (Environment, Social, Governance). We also exclude professional football clubs and any activities that are subject to money laundering risk and sports practices that use firearms. The Fund has received the SRI Label since its inception. Investing in sports is a responsible investment method, as sports economics has many extra financial implications. Sport is at the center of many social and societal problems as a vector of integration, educational values and social diversity. It is also a lever to animate zones.
What will be the result after a year and a half?
After the first few months following launch, the fund had a somewhat positive absolute performance in a somewhat negative macroeconomic and geopolitical context, a year and a half later. In fact, inflationary pressures have continued to increase since the beginning of the year and the purchasing power shock is affecting households. In this context, Mandarine Global Sport, which is naturally exposed to on-demand consumption, was also negatively affected.
However, the management team managed to adapt to reduce the fund’s volatility. Specifically, we have identified several key markets (nutrition, equipment, e-sports, clean mobility) that provide our exposure to a variety of growth factors. The diversification of the portfolio also lies in its equally weighted geographical distribution, which is beneficial in 2021 but weighing on performance in 2022 with the conflict in Ukraine. Despite a cyclical and temporary slowdown in our view, growth prospects and the fundamentals of the theme remain very attractive. Consumers still have substantial unspent savings, their order books are full, and their supply chains seem to be on the mend. On the commercial side, we received a lot of attention from investors, especially distributors. Given the attractive outlook this long-term theme offers, we are sure it will continue to attract investors.