“L’économie du sport est porteuse d’impacts extra-financiers”

You launched the Mandarine Global Sport fund a year and a half ago. Why this theme?

The economics of sport 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: the growing awareness linked to well-being and health, the diversification and expansion of sports populations (seniorization, feminization), the rise of the middle classes who are accessing the practice of sport, in particular in emerging countries. At the same time, digitalization trends and technological innovations are enabling new sports practices, expanding the addressable market on a global scale. We decided to launch the fund Tangerine Global Sport to gain exposure to this economy, relying on our knowledge of companies as a stock picker, to seek out the best players in the industry in our view.

We exclude professional football clubs and any activity exposed to the risk of money laundering, as well as sporting practices that use firearms.

What is the investment strategy and how do you incorporate ESG into it?

Mandarine Global Sport is a fund invested in equities on a global scale. We have built our investment universe around four diversified and weakly correlated segments: sports performance (food hygiene, connected watches), sports equipment and materials, infrastructure and organizations (stadiums, gyms, sponsorship and events), and digital consumption (e-sport, media, audiovisual). The companies identified must make more than 30% of their turnover in sport, but in reality, for 90% of the companies in the portfolio this figure is above 50%.

A proprietary filter based on extra-financial criteria then makes it possible to eliminate the companies with the lowest ratings on the ESG criteria (Environment, Social, Governance). Furthermore, we exclude professional football clubs and any activity exposed to the risk of money laundering, as well as sports practices that use firearms. The fund received the SRI label from its inception. Investing in sport is a responsible way of investing, since the sport economy has many extra-financial impacts. Sport is at the heart of many social and societal issues, being a vector of integration, educational values ​​and social diversity. It is also a lever for revitalizing territories.

What results after a year and a half?

After a good first few months following the launch, the fund posted a slightly positive absolute performance a year and a half later in an unfavorable macroeconomic and geopolitical context. In fact, since the beginning of the year, inflationary pressures have continued to increase and the purchasing power shock is having an impact on households. In this context, Mandarine Global Sport, which is naturally exposed to discretionary consumption, was negatively impacted.

However, the management team was able to adapt to dampen the fund’s volatility. In particular, we have identified various underlying markets (nutrition, equipment, e-sport, clean mobility) which have enabled us to be exposed to various growth drivers. The diversification of the portfolio also lies in its equally weighted geographical allocation, beneficial in 2021 but which weighs on performance in 2022 with the conflict in Ukraine. Despite a slowdown which, in our view, is cyclical and temporary, the growth prospects and the fundamentals of the theme remain very attractive. Consumers still have significant unspent savings, order books are full and supply chains appear to be on the mend. On the commercial side, we have seen strong interest from investors, particularly distributors. Given the attractive prospects offered by this long-term theme, we remain confident that it will continue to appeal to investors.