Schroder ISF* Global Energy Transition
Not just an opportunity - but a necessityOur approach
Schroder ISF* Global Energy Transition provides focused thematic exposure to the low-carbon energy transition. It seeks opportunities in multiple investable markets across key value chains, including renewable power and energy storage. It is an actively managed global equity fund, 100% free from fossil fuels and nuclear, that aims to deliver long-term capital growth by investing in the best-in-class companies driving the transition to a low-carbon economy.
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Why Invest?
Alpha Equity
The impacts of climate change have been well documented. The transition to clean energy will play a vital role in addressing the challenges posed by climate change and will result in widespread change to how we produce, distribute and consume energy.
Sustainability
This change will require $120 trillion of investment across the value chain by 2050 if we are to achieve our climate targets. Such mammoth investment will create significant opportunities for companies to generate strong real earnings growth, translating into more value for shareholders and sizable opportunities for investors.
Why Invest Now?
Three key factors are now working in unison that will help companies involved in the energy transition generate significant long-term earnings growth, resulting in a powerful investment environment:
- Environmental concerns and policy support: Current policies are tackling climate change but we expect these to be enhanced in the coming years, leading to higher rates of investment into the energy transition space.
- Renewable energy is now cost-competitive: From a purely economic perspective, renewable energy makes the most sense as it is now cheaper than traditional fuel sources like gas and coal.
- Increased consumer demand: There is strong consumer demand for technologies that use renewable energy. Electrical vehicles, solar-powered homes and self-administering energy storage are just some examples of areas that are rapidly growing.
Investment Approach
Unconstrained approach that transects traditional sector classifications, style biases, geographies and market capitalisations.
Use of an investment process established since 2005 and designed specifically for active investment management in resource equities.
Focus on finding long-term, sustainable earnings and cash flow growth at a reasonable value.
Highly active allocation that creates opportunities to generate excess returns above passively-managed alternatives.
Long-only, no leverage, no complicated derivatives.
Risk controlled through liquidity limits, the 5/10/40 concentration rule and use of cash.
Role in Portfolios
As a long-term, sustainable growth play that takes advantage of structural earnings growth over multiple business cycles.
As a source of equity diversification due to the agnostic approach taken to geographies, style biases and traditional sectors.
As a thematic investment, able to circumvent issues such as political and monetary policy challenges and tap into the growth sectors of the future.
Meet the Managers
Schroder ISF* Global Energy Transition is managed by Head of Resource Equities, Mark Lacey, and fund managers, Alex Monk and Felix Odey.
Risk considerations
*Schroder International Selection Fund is referred to as Schroder ISF.
- Concentration risk: The fund may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions. This may result in large changes in the value of the fund, both up or down.
- Counterparty risk: The fund may have contractual agreements with counterparties. If a counterparty is unable to fulfil their obligations, the sum that they owe to the fund may be lost in part or in whole.
- Currency risk: The fund may lose value as a result of movements in foreign exchange rates.
- Derivatives risk – efficient portfolio management: Derivatives may be used to manage the portfolio efficiently. A derivative may not perform as expected, may create losses greater than the cost of the derivative and may result in losses to the fund.
- Higher volatility risk: The price of this fund may be volatile as it may take higher risks in search of higher rewards.
- IBOR risk: The transition of the financial markets away from the use of interbank offered rates (IBORs) to alternative reference rates may impact the valuation of certain holdings and disrupt liquidity in certain instruments. This may impact the investment performance of the fund.
- Liquidity risk: In difficult market conditions, the fund may not be able to sell a security for full value or at all. This could affect performance and could cause the fund to defer or suspend redemptions of its shares.
- Market risk: The value of investments can go up and down and an investor may not get back the amount initially invested.
- Operational risk: Operational processes, including those related to the safekeeping of assets, may fail. This may result in losses to the fund.
- Sustainability risk: The fund has the objective of sustainable investment. This means it may have limited exposure to some companies, industries or sectors and may forego certain investment opportunities, or dispose of certain holdings, that do not align with its sustainability criteria. Therefore, the fund may underperform other funds that do not apply similar criteria. The fund may invest in companies that do not reflect the beliefs and values of any particular investor.
Important information:
For professional investors and advisers only. The material is not suitable for retail clients. We define "Professional Investors" as those who have the appropriate expertise and knowledge e.g. asset managers, distributors and financial intermediaries
This information is a marketing communication. This information is not an offer, solicitation or recommendation to buy or sell any financial instrument or to adopt any investment strategy. Information herein is believed to be reliable but we do not warrant its completeness or accuracy. Schroders has expressed its own views and opinions in this document and these may change. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. Exchange rate changes may cause the value of any overseas investments to rise or fall. Past Performance is not a guide to future performance and may not be repeated. This document does not constitute an offer to anyone, or a solicitation by anyone, to subscribe for shares of Schroder International Selection Fund (the “Company”). Nothing in this document should be construed as advice and is therefore not a recommendation to buy or sell shares.
Subscriptions for shares of the Company can only be made on the basis of its latest Key Investor Information Document and prospectus, together with the latest audited annual report (and subsequent unaudited semi-annual report, if published), copies of which can be obtained, free of charge, from Schroder Investment Management (Europe) S.A.
Issued in March 2023 by Schroders Investment Management Ltd registration number: 01893220 (Incorporated in England and Wales) is authorised and regulated in the UK by the Financial Conduct Authority and an authorised financial services provider in South Africa FSP No: 48998.