Shares winning from this 'unstoppable' mega-trend

TL;DR

Teemo Lang, manager of the Polar Capital Smart Energy fund, discusses the unique approach and performance of the fund, the impact of macroeconomic factors, the current state of the clean energy sector, and the role of politics in renewable energy investments.

Transcript

hello and welcome to the latest Insider interview Our Guest today is Teemo Lang manager of the Polar Capital Smart Energy fund Teemo thank you very much for coming in thank you for having invited me the active share of the portfolio is 98% so it's just a 2% overlap with the msci all country World index that means you look nothing like the index at ... Read More

Key Insights

• 🫰 The Polar Capital Smart Energy fund focuses on companies driving the energy transition, resulting in a small overlap with benchmark indices.
• ☠️ The fund's performance is influenced by interest rates and consumer sentiment, as well as macroeconomic factors.
• 🫰 Lang highlights that the fund has outperformed its internal benchmark and peer group, despite underperforming the broader market index.
• 🍉 Clean energy investments are vulnerable to hype and over pessimism, but the sector's long-term growth is driven by trends such as electrification and the decreasing cost of renewable energy generation.
• 🧑‍🏭 The inflation reduction act in the US and geopolitical events have influenced the clean energy sector's valuation and government support.
• 🔬 The fund considers political sensitivity and aims to invest in companies that can thrive regardless of political decisions and subsidy schemes.
• 🏛️ Building out electricity grids globally, including in the UK, is crucial for effective renewable energy distribution.
• 🇨🇳 China is the largest deployer of renewable energy, with aggressive targets for solar and wind deployment, while India lags behind.
• 🔬 Teemo Lang personally invests in the Polar Capital Smart Energy fund, demonstrating confidence in the product.

Questions & Answers

Q: Why does the Polar Capital Smart Energy fund have such a small overlap with the benchmark index?

The fund focuses on the clean energy sector, which is a niche area of investing. It aims to invest in companies that will drive the energy transition, rather than following the broader market.

Q: What types of markets does the fund generally perform best in?

The fund performs well in markets that support clean energy deployment. However, it is sensitive to interest rates and consumer sentiment, as these factors can impact the cost of capital and consumer behavior.

Q: Has the underperformance of the fund been due to macroeconomic factors or stock-specific issues?

While the fund has underperformed the broader market index, it has performed well against its internal benchmark and peer group. However, macroeconomic factors can influence the clean energy sector's performance.

Q: Is now a good time to invest in clean energy, considering the cycle of optimism and pessimism?

According to Teemo Lang, the sector experienced hype in previous years, but there has been a correction recently. He believes it is a good time to invest, emphasizing the need to diversify across the clean energy value chain.

Summary & Key Takeaways

• Teemo Lang explains that the Polar Capital Smart Energy fund focuses on companies driving the energy transition and has a limited overlap with the broader market index.

• The fund performs best in markets that support clean energy deployment, but is sensitive to interest rates and consumer sentiment.

• Lang highlights that the fund has outperformed its internal benchmark and peer group, despite underperforming the broader market index.