Hey Green Investors, 🌱
𝗛𝟭 𝟮𝟬𝟮𝟮 𝗦𝘂𝗺𝗺𝗮𝗿𝘆
Part 1 of 2
Well, it’s been a difficult start to the year for all asset classes, and no doubt we’ve all seen the “stock market suffers worst start to the year in 50 years” headlines. Our YTD performance is -13.78%, with -2.02% in closed positions.
Looking at the relative performance of our portfolio year to date shows an outperformance against all but one of our benchmark ETFs, whilst also coming in ahead of nearly all indices.
☀️ $TAN (Solar) -9%
🍀 @Tom1313 -14%
🔌 @RenewableEnergy -15%
💨 FAN (Wind) -16%
🌽 KROP (AgTech) -20%
🪨 CRIT (Materials) -22% *launched 29 March
💧 $FIW.US (Water) -23%
🚗 KARS (EV) -26%
⚛️ HYDR (Hydrogen) -43%
🇬🇧 $UK100 -4% / 🇬🇧 FTSE250 -22%
🇪🇺 STOXX600 -17%
🇫🇷 CAC40 -18%
🇩🇪 DAX40 -20%
🇺🇸 $SPX500 -21%
🇺🇸 $NSDQ100 -30%
Relatively speaking I think we can be happy with the resilience of our portfolio in the face of very challenging macroeconomic conditions. The story looked much brighter prior to July, a month in which ~50% of our losses YTD occurred.
The steep decline comes as markets seem to have shifted focus from inflation worries to fears of slowing growth and a recession. This had an outsized impact on our critical materials holdings, with the price of many commodities falling sharply. Many of these companies producing the materials crucial to the energy transition are now trading at single digit price/earnings multiples, whilst yielding >5% in dividends. A fragmentation of global markets and the increasing focus on onshoring supply chains reaffirms my long term conviction in these companies.
Another issue weighing on our European holdings is the very real risk of gas supplies being cut from Russia to the bloc. Indeed this is something that could come to a head as soon as a fortnights time, with many speculating that planned maintenance of the Nord Stream 1 gas pipeline could be used as a bargaining chip to the opening of Nord Stream 2, or at least result in a stalemate scenario. Gas rationing and a shutdown of manufacturing would certainly roil markets, all this ahead of peak winter demand for gas.
Energy security and independence is now firmly one of the top priorities for nations the world over, and will provide massive tailwinds for the rollout of renewables, storage and the energy transition. We’ve seen numerous increased targets and commitments, particularly in Europe, although it must be said in the US Biden’s failure to make any progress on his Green Agenda has been a real disappointment.
On a global scale most central banks are raising interest rates, something that filters through to all aspects of markets. Increasing the risk-free rate of return, lowering the value of future earnings, making it more difficult to borrow money and more expensive to service debt.
I’ve let go of a few of our fringe holdings on the basis that their path to profitability is much more difficult in the current climate, with shareholder dilution, consolidation or bankruptcies only likely to increase as financial conditions continue to tighten. Also with the idea firmly in mind that copiers who are taking advantage of dollar-cost-averaging have their funds allocated in the best possible way.
Please see attached our portfolio heatmap for the first half of the year.
Despite what appears to be a consistent barrage of negative news, the fact that a lot of hot air has already come out of markets can also be viewed as a good thing, and a great opportunity to add to some companies at much better prices.
I think it’s too soon to call any bottom, despite historical data showing that after such a poor H1, H2 is typically positive for indices. Without the ability to perfectly time the market, dollar-cost-averaging, focusing on the quantity of shares held as apposed to their value should reward us in the long term.
I recently attended the eToro @popularinvestors summit, despite the difficult start to the year, most PI’s remained very constructive on the long term market outlook. I also had the opportunity to sit down with @JeppeKirkBonde , it was great to chat with such a successful long-term investor, and to hear how he makes decisions in terms of decades, filtering out short-term worries and focusing more on mega trends.
𝗛𝟭 𝟮𝟬𝟮𝟮 𝗦𝘂𝗺𝗺𝗮𝗿𝘆 Part 2 of 2 - etoro.tw/3I9rFcp
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Thanks one the best laid out answers in the last couple of weeks of PI's going nuts with adding funds and causing their copiers grief.
I will keep your strategy in mind when determining where to allocate additional funds.
Thankyou for your response :D
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