Climate change will be biggest investment S curve in the next 30 years
Climate change will be the biggest investment ‘S’ curve in the next 30 years, as governments and business worldwide aim to achieve zero net carbon emissions by 2050, according to Munro Partners.
Nick Griffin, Munro Partners founding partner and chief investment officer, said the decarbonisation of the planet was inevitable as there were too many stakeholders on board now.
“When Europe, China, Microsoft, BHP all say they want to go zero carbon by 2050, they’re not saying emit less carbon, they’re saying emit no carbon,” Griffin said.
“We conservatively estimate this is going to cost $21 trillion over the next 30 years so this is going to be the biggest S curve of my investment lifetime – the one before that was the internet.”
Griffin said climate was now the firm’s biggest area for structural growth for 2021 and that was the case before Joe Biden won the US presidential election, as the US Democratic party was additionally expected to push policy in that direction.
“There was a pandemic last year and it got a lot of attention but there was also a quasi-epidemic of countries, councils, states, you name it, announcing zero carbon targets,” Griffin said.
“We think this is really the next big structural opportunity in the world for the next 20 years and it’s the biggest area of the fund today.”
Griffin said the economic conditions were not particularly favourable for cyclical growth which meant they would remain reliant on structural growth.
“When we’re investing and looking for structural growth, we’re looking for things that are going to grow double or triple times gross domestic product [GDP],” Griffin said.
“And if we can find those areas of structural growth and find those winners then we get earnings growth which leads to share price growth and that’s how we get our excess returns.”
The firm continued to back the technology sector over the long-term, despite any potential cyclical shifts.
“We still have our technology holdings; there is a lot of temptation in the market to buy the cyclical sectors for a COVID recovery,” Griffin said.
“I can see why people are doing that – it makes sense for a six to 12 month view – but in the next three to five years if you are still trying to find those structural winners, digital areas are the place to look.”
According to FE Analytics, over the last three years to 30 November, 2020, the Global Growth fund returned 29.48% versus 7.44% in the global equities sector; while the Concentrated Global Growth fund returned 25.19% versus 5.38% in the absolute return sector.
Performance of Munro funds over the last three years to 30 November 2020
AUTHOR
Chris Dastoor
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
