We believe that the argument that there is a trade-off between environmental thematic investing and long-term performance does not stand up. The concept of taking high levels of risk for higher returns is often associated with thematic funds that focus on technology stocks or disruptive trends, but it’s important to remember that many environmental companies are also disrupters. To both create alpha and mitigate risk in this space, the technological know-how and acumen of the investment team are crucial.
Many innovative technologies in the environmental space can offer great investment opportunities. The rise of wind and solar power is a good example of upcoming industries that have been successful and transformative, and have seen. These companies are becoming established energy providers.
We believe many energy transition-related areas have yet to come close to fulfilling their potential.
Given the need to transform multiple areas of our existence, the question should not be whether environmental funds will deliver competitive long-term returns, but whether the opportunity cost of not being present in this area could be too high.