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Polar Capital Smart Energy Fund: in it for the long term


As the drive to find clean energy solutions continues apace we take a look at the Polar Capital Smart Energy Fund, one of the recently launched smart energy funds.

Launched in October 2021 and managed by Thiemo Lang who joined Polar Capital in September 2021 from Robeco where he also managed a smart energy fund (RobecoSAM Smart Energy), this fund is for investors who are in it for the long term.

The team’s underlying belief is that sustainable companies provide highly competitive technologies and solutions to the transformation and decarbonisation of the global energy sector all with smart energy at its core. It is an accumulator fund – automatically reinvesting which means no dividends.

Smart energy defined

Smart energy is essentially the process of using devices for energy-efficiency. It focuses on sustainable renewable energy sources which include sectors such as electricity, heating, buildings and transportation, that promote greater eco-friendliness while driving down costs.

Regulatory environment could boost returns

Even without the pressures of the energy crisis, globally, power consumption is set to more than double by 2050. Regulators are jumping in on the act too. The European Commission for example aims to achieve no net emissions of greenhouse gases by 2050. It has adopted a set of proposals to make the EU’s climate, energy, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. This includes energy efficient buildings, cleaner energy and cutting-edge technological innovation throughout the supply chain.

On top of this, in August this year, US President Joe Biden signed The Inflation Reduction Act which will boost the US clean energy sector. It includes tax breaks of up to $296bn for emissions cutting measures particularly for renewable energy and electric vehicles. It’s worth noting that almost 50% of the fund’s investments are in the US while around a quarter of the fund’s investments are in Europe. The rest are in Japan (13.3%), Asia Pac ex Japan (9.9%) and Middle East & Africa (1.5%).

With the smart energy market expected to reach around $250 billion by 2027 and while there’s no doubt it has a higher level of volatility – it is category 6 risk – Polar Capital Smart Energy should be well-placed to benefit.

Polar Capital Smart Energy Fund facts

The Polar Capital Smart Energy Fund is run by an experienced team. Lead manager, Thiemo Lang has a PhD in Optics/Photonics, Grenoble Institute of Technology, a Diploma of Electronics and over 20 years of experience in investment management. The fund invests along the whole clean energy value chain – from energy efficiency (34.4%), energy conversion and storage (27.5%), clean power generation ((24.5%) and energy transmission and distribution (13%). Top holdings include Enphase Energy (NASDAQ:ENPH), Lattice Semiconductor (NASDAQ:LSCC), Boralex (TO:BLX) and Renesas Electronics (JPY:RNECF).

The fund which currently has around $60m under management, returned 6.4% in its first three months, only slightly underperforming the broader MSCI AC World TR Net, which returned 6.7% during the same period. However, this year it has suffered significant losses. The first half of 2022 saw losses of -25% although by the end of July losses were at around -10%, underperforming the MSCI AC World TR Net which returned around -9%.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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