The objective of the Purpose Energy Transition Fund (CLMT) is to generate long-term returns by investing in companies that benefit from the global transition to net zero. Our team achieves this objective by leveraging a fundamental, top-down approach to selecting global equities from a broad universe.
The idea
• The global consensus around the threat posed by climate change is driving ambitious commitments to reduce GHG emissions.
• It will require a balanced approach to address the energy transition in a successful and sustainable way while also meeting today’s energy security imperative.
• We are driven by a view that there is exploitable opportunity in incremental transition rather than binary outcomes. Meeting emissions reductions targets and ultimately getting to net zero will require abatement within traditional energy, expansion of proven renewables capacity, and new transformative technologies.
• The notion of “transition” is the primary driver of the fund’s strategy, which seeks to identify companies that (1) develop technologies that directly support the transition to net zero, (2) innovate through adopting new technologies to be abatement leaders within their respective industries, and (3) produce natural resources with meaningful incremental demand linked to these themes.
The Investment Process: Exposure to Five Thematic Buckets
We bucket securities according to five themes that holistically capture all the companies and industries positioned to benefit from the policy and economics of the transition to net zero. The five themes include clean energy, energy transition, transport and infrastructure, energy efficiency, and circular economy. Across all five core themes we focus on low-impact businesses, transformational technologies, and companies with high abatement potential to select winning stocks.
Supplementing the Top-Down Selection Processes with a Lifecycle Approach
In addition to selecting securities that provide exposure to each thematic bucket, we also use a lifecycle approach to ensure that each theme has diversification across the technology lifecycle. The lifecycle approach includes three phases: (1) energy transition, which includes high emissions-intensive industries with high abatement potential and growth opportunities in energy transition solutions; (2) new demand creation, where we look for companies that are inventing products that satisfy the demand for energy while not creating any net new emissions; and (3) net removal of carbon and emissions from the system.
Geographic Allocation
We created a global mandate because there are a multitude of different strategies to reduce emissions developing all over the world. For example, opportunities in the refining space under the energy transition theme will likely be in the U.S. where they have the most complex refining capabilities and stringent biofuel blending regulations. In the clean energy space, offshore wind is most successful in Europe where they are in close proximity to the jet stream.
Ultimately security selection comes down to our team doing the hard work in quantemental screening, recognizing the technologies available to reduce emissions in different industries, understanding individual businesses through talking with management teams, and staying on top of capital flow and new deals in the space.
A Word About ESG
• This fund is intended to be a thematic growth strategy linked to the fight against climate change.
• ESG is not incorporated into the investment process as the primary driver of security selection. Like many other Purpose funds that incorporate ESG, it is used as an input to security selection that may or may not be material on a case-by-case basis.
All data sourced from Bloomberg unless otherwise noted.
The content of this document is for informational purposes only, and is not being provided in the context of an offering of any securities described herein, nor is it a recommendation or solicitation to buy, hold or sell any security. The information is not investment advice, nor is it tailored to the needs or circumstances of any investor. Information contained in this document is not, and under no circumstances is it to be construed as, an offering memorandum, prospectus, advertisement or public offering of securities. No securities commission or similar regulatory authority has reviewed this document and any representation to the contrary is an offence. Information contained in this document is believed to be accurate and reliable, however, we cannot guarantee that it is complete or current at all times. The information provided is subject to change without notice.
Commissions, trailing commissions, management fees and expenses all may be associated with investment funds. Please read the prospectus before investing. If the securities are purchased or sold on a stock exchange, you may pay more or receive less than the current net asset value. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.