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Schroders targets low carbon shift with Global Energy Transition fund

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Schroders is aiming to harness the global shift towards a low carbon energy system with the launch of its Global Energy Transition fund, meeting growing client demand for actively-managed exposure to this fast-evolving and ground-breaking sector.

The Schroder ISF Global Energy Transition will aim to identify growing opportunities across the clean energy-focused investment universe, spanning renewable power production and energy equipment, transmission and distribution, energy storage, smart grid technologies and electric vehicle charging.

The strategy will not invest in companies with exposure to nuclear or fossil fuels.

It will harness three significant global trends; the decarbonisation of power generation, the electrification of energy use and increased energy efficiency for its investment process.

Schroders Global Investor Study has found that investors are placing significant emphasis on fund managers’ focus on pollution and the growing importance of renewable energy.

This new long-only fund will have a strong sustainability focus and a bias towards ‘best-in-class’ companies, as well as those that can demonstrate clear progress towards improvement. It will use a focused thematic approach, managed by Schroders’ well-established commodities and resources investment team, founded in 2005.

The team will have a high-conviction approach and will look to allocate to 30-50 stocks for the portfolio.

Mark Lacey, Head of Commodities and Fund Manager of the Schroder ISF Global Energy Transition, says: “The energy transition opportunity is vast with around USD120 trillion of investment into the sector required by 2050 to meet globally agreed climate goals. This tremendous investment, coupled with growing consumer demand for clean technologies, is creating strong real earnings growth opportunities for companies in this space which in turn we hope will benefit our clients.

“A significant inflection point has now been reached in the last two years which is allowing companies in the sector to become attractive investment opportunities. We therefore believe this could be a beneficial time for our clients to allocate to energy transition. Crucially, our focus will be on the energy system and the associated technologies needed to enable its change.

“Our long-standing, unconstrained and active investment approach is very well-suited to the energy transition sector as the investment opportunity is very broad and varied in both quality and upside potential.“

Andrew Howard, Head of Sustainable Research, Schroders, says: “Given the dramatic change in ways we produce and consume energy, investors increasingly recognise that exposure to the energy transition sector is not just an investment opportunity but also a necessity. The energy transition is needed in order to significantly reduce carbon emissions and limit future global temperature rises to less than 2°C, as demonstrated by Schroders’ Climate Progress Dashboard.

“There is now global recognition from governments, consumers and investors that the production of clean energy is essential for the planet. The other recognition is that the scale of the investment required to achieve the transition to more sustainable energy is in the trillions of dollars.

“Renewable energy and electric vehicles are only a part of the change, the way we use electricity, the way it is stored and how it is distributed needs to be updated and this requires significant investment. Schroders is excited to be able to offer investors exposure to this fast growing and exciting sector using an active approach.”

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