Marcus Grimfors’ Insights in NordSIP

NordSIP has conducted a review covering 53 globally actively managed Article 9 funds. These include 14 Nordic equity funds, 11 fixed-income funds, and 28 international funds, divided between public and private asset strategies. The report highlights the ongoing impact of a “higher for longer” interest rate environment, which has benefited long-duration bond funds but put pressure on renewable energy stocks due to their capital-intensive nature. Despite recent challenges, there is growing long-term optimism around renewable energy.

Our portfolio manager and partner, Marcus Grimfors, notes that renewable energy continues to pose challenges for sustainable investments during the second quarter of 2024. All environmental sectors in which the fund invests—renewable energy, cleantech, and water—experienced declines during the quarter, measured in Swedish kronor (SEK). Of these sectors, water was the most stable, with a minor decline, while renewable energy dropped by more than 5%.

Despite these challenges, there were positive contributors within the fund’s portfolio. ABB, Alfa Laval, and Badger Meter were the companies that made the most significant positive contributions during the quarter. On the other hand, Franklin Electric, IDEX, and Watts Water were the largest detractors from the fund’s returns. By the end of the quarter, the fund had no exposure to the renewable energy sector, indicating a strategic adjustment to navigate the challenges faced by this sector.

Grimfors emphasizes that the fund’s market outlook remains similar to the previous quarter, with increased dispersion among the largest technology companies, often referred to as the “Mag 7,” and a less concentrated market overall. This presents more opportunities for sustainable investments, particularly compared to the MSCI World Net Index. The increased dispersion within the “Mag 7” suggests that the market has become more diversified, which could benefit a long-term investment strategy focused on sustainable sectors.

In conclusion, Grimfors observes that the global market is in a transitional phase. Certain sectors, like water, have demonstrated stability, while others, such as renewable energy, have faced greater challenges recently. However, this creates opportunities for long-term sustainable investments to grow as the market adjusts to new conditions.

Read NordSIP’s full report here.

All investments involve risk. Historical performance is never a guarantee of future returns. Unit prices and values can both increase and decrease, and an investment can be lost. This is not financial advice.