Warning: members of the public are being contacted by people claiming to work for AXA Investment Managers UK Limited.  Find out more information and what to do by clicking here.

Equities

Clean Economy strategy - August 2021

  • 22 September 2021
  • 5min read

Significant progress made in climate change policy during the first half of the year

  • Global equity markets continued to rise during August
  • The US Infrastructure plan continues to advance
  • All four themes contributed positively to performance

What’s happening?

After a strong first half to the year, global equity markets continued to rise during August. 

We note a continuation of the significant progress made in climate change policy during the first half of the year. The US Infrastructure plan continues to advance and EU policy is increasingly supportive of the Energy Transition. In China, we have seen speculation around plans for a large scale solar and wind project which could add as much renewable capacity as is currently installed in Europe. The ongoing commitment shown from all regions is a reflection of the growing recognition of the need to change and the breadth of viable applications for clean technology as a result of innovation and scale. This is supportive of widespread adoption of clean technology solutions to the challenge of climate change.

Portfolio positioning and performance

The Clean Economy strategy outperformed the broader equity index (MSCI All Country World) during August. With a positive contribution from all areas.

In ‘Smart Energy’, US renewable player NextEra continued to outperform following strong quarterly earnings the prior month. Alfen also contributed positively as a result of the strengthening outlook and Vestas Wind Systems recovered some earlier weakness which we attributed to temporary margin pressures.

In ‘Low Carbon Transport’, Infineon Technologies was the best performing holding. At its quarterly earnings event, management took the opportunity to underscore the strength in demand it sees and the positive outlook for 2022.

‘Agriculture and Food’ saw strength in Trimble which posted strong quarterly earnings and announced a share buyback which was viewed positively by the market.

‘Natural Resource Preservation’ benefitted from broad based strength including from Evoqua Water Technologies which is a beneficiary of the US Infrastructure bill and the growing attention paid to water quality. Ball Corp responded well to reports of strong quarterly earnings.

We made no material changes to the portfolio during August.

Outlook

The EU and its member states have underlined their commitment to Net Zero 2050, set the framework for a green recovery in Europe and continue to advance longer term environmental policy. China has recently made a commitment to net zero by 2060, a significant move which came sooner than many expected. The US has pledged to half emissions by 2030 on its path to Net Zero 2050 and progress with policy is becoming evident. Corporates are also increasingly committed to Net Zero targets and are investing accordingly, seeking clean energy, storage and energy efficiency services. In addition to existing consumer trends and cost-effective technologies, this represents accelerated opportunity for the Clean Economy. We see commitment to innovation underpinned by growing demand visibility and expect this to create new areas of investment potential.

We retain the view that high quality management teams, operating businesses with a sustainable competitive advantage in their markets and with the benefit of secular tailwinds are best placed to weather the current storm and to seize opportunities for growth. The portfolio is therefore well positioned to benefit from the secular growth opportunities we see within the Clean Economy.

No assurance can be given that the Clean Economy strategy will be successful. Investors can lose some or all of their capital invested. The Clean Economy is subject to risks including Equity; Emerging Markets; Global Investments; Investments in small and micro capitalisation universe; Investments in specific sectors or asset classes.

Read the full article
Download article (215.62 KB)

Have our latest insights delivered straight to your inbox

SUBSCRIBE NOW
Subscribe to updates.

Related Articles

Equities

Clean Economy strategy - September 2021

  • 17 October 2021
  • 5min read
Equities

Climate Change and Investment

  • 08 October 2021
  • 3min read
Equities

Sustainability: What will your impact be?

  • 08 October 2021
  • 5min read
Are you a financial advisor, institutional, or other professional investor?

This section is for professional investors only. You need to confirm that you have the required investment knowledge and experience to view this content. This includes understanding the risks associated with investment products, and any other required qualifications according to the rules of your jurisdiction.

    Disclaimer

    : This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.

    Past performance is not a guide to current or future performance, and any performance or return data displayed does not take into account commissions and costs incurred when issuing or redeeming units. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Exchange-rate fluctuations may also affect the value of their investment.  Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding.

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. The strategies discussed in this document may not be available in your jurisdiction.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Please note that the management company reserves the right, at any time, to no longer market the product(s) mentioned in this communication in an European Union country by notification to its authority of supervision in accordance with European passport rules. In the event of dissatisfaction with the products or services, you have the right to make a complaint either with the marketer or directly with the management company (more information on our complaints policy available in English here). You also have the right to take legal or extra-judicial action at any time if you reside in one of the countries of the European Union. The European online dispute resolution platform allows you to enter a complaint form (by clicking here) and informs you, depending on your jurisdiction, about your means of redress (by clicking here).

    Risk Warning

    The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested.