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Clean Energy Equity investing

April 2021

Clean Energy

Our Clean Energy strategy is a concentrated global equity offering that aims to deliver long term growth by investing in companies supporting and/or benefiting from the move to a low carbon economy.

Fig 1 - Clean Energy overview.png

Source: Pictet Asset Management. Data as of 31.03.2021. Please note that the strategy is benchmark agnostic; the MSCI AC World is not a benchmark but a reference index which serves as a proxy for global equities (other proxies such as MSCI World are appropriate).

The Pictet Clean Energy strategy aims to identify the most attractive investment opportunities in four key areas:

  1. Renewable energy
  2. Energy efficiency
  3. Enabling technologies
  4. Enabling infrastructure.

These four areas have a vital role to play in helping the world move through its energy transition.

Why invest in the energy transition?

In the wake of COP 21 and, more recently, the European Green deal, it is increasingly clear the world is recognising the urgency to move towards a low-carbon economy and acting accordingly. At the same time, increasing energy usage caused by rapidly growing populations and economic expansion in emerging markets, means demand for energy will continue to rise long into the future.

The only way to meet the world’s growing demand for energy while decreasing its carbon emissions is to adopt more energy-efficient technologies and switch to low – or zero – carbon energy alternatives.

Combined with accelerating advances in enabling technologies, we believe this energy transition will create investment opportunities for decades to come. This is where we believe our Clean Energy strategy is a very relevant solution; very well suited for investors looking to accelerate and invest in this transition.

Fig 2.png

Source: Pictet Asset Management

Long term performance

Pictet Clean Energy strategy has a track record that is one of the longest in the industry and reflects the journey we have been on in this exciting and increasingly important part of the market and economy.

Pictet Clean Energy -  composite performance - USD, gross of fees
Periods over 1 year are annualised
Fig 4 - Clean Energy Perf.png

Source: Pictet Asset Management. Data as of 31.03.2021. Past performance is not a guide to the future, losses may be made. Source GIPS composite report accessible here. The composite inception date is 31.05.2007. Pictet Asset Management claims compliance with the Global Investment Performance Standards (GIPS®. Please click here if you need a compliant presentation and/or a list of our composite descriptions

The experienced team that manage the Clean Energy strategy sit within our pioneering Thematic Equities team that manages around USD 53bn across a range of strategies, including other environmental strategies such as Pictet Water, Pictet Timber and .

Measuring impact

As the chart below shows, using the Planetary Boundaries framework*, the Pictet Clean Energy portfolio achieves a significantly more positive environmental impact than that of a typical global equity strategy across almost all nine dimensions. This is particularly apparent for the climate change, atmospheric aerosol loading (fine particulate matter) and ocean acidification categories.

This translates into a direct positive impact on the environment and global health. It is estimated that over 6.5 million people die of air pollution every year**. Reducing atmospheric aerosol has a direct, measurable impact on health.

The portfolios’ Freshwater use is higher than that of the reference indices due to its investments in renewable energy and electricity networks which include hydraulic power generation. To access the impact report for the strategy click here.

Demonstrable impact

Using the Planetary Boundaries framework to compare Pictet Clean Energy versus MSCI World Energy and MSCI AC World

PB_impact_CleanEnergy.jpg

Source: Pictet Asset Management, Neosys, 30.06.2020. Our environmental footprint analysis is based on a full life-cycle analysis of the products and services provided by companies (scope 1-4). The environmental data we show can therefore differ significantly from more conventional measures (typically Scope 1 and Scope 2 carbon data). The strategy is not constrained by MSCI ACWI and MSCI Energy are shown for comparison purposes only. The indexes do not influence portfolio construction and the strategy’s investment universe extends beyond the components of the indexes. Alternative global equity indexes are equally appropriate. 

To summarise, we view the Pictet Clean Energy strategy as a long-term growth holding offering:

  • Demonstrable sustainable impact
  • Diversification
  • Exposure to the energy transition
  • Scope for continued outperformance of global equity indices.