Portfolio manager comments — Q2 2024
Q2 marked an improvement for the fund relative to similar funds following a challenging Q1. The reports from the fund’s investee companies were stronger overall than during the previous quarters. Several segments contributed strongly, most notably energy effectiveness within industrials as well as wind power companies, while solar energy lagged.
Enovix, a pioneer within energy-dense batteries, was the strongest contributor. Cadeler, which installs offshore wind farms, and TSMC, a global leader within semiconductors, also contributed strongly. Array, which provides solar tracking solutions, had the most negative impact despite a strong report and saw volatility in its share price performance driven by concerns that projects would be postponed. Bakkafrost and Shoals also lagged.
The rapidly growing usage of AI and the extensive expansion of data centers is an area that has received increased attention and results in greater demands on electrical energy. This has highlighted the need for a strong electrical grid and increased energy capacity from cost-effective energy sources like solar and wind power that can be expanded rapidly. The fund has a significant number of investments that benefit from this and these were increased during the period.
The political arena has become more complicated with the EU election, although we do not expect a major impact over the short term. The presidential election campaign has begun in the US, which can lead to headlines and some volatility within climate policies. A complete reversal of climate policy is unlikely as current regulations are difficult to change and major portions of the climate package are also supported by the Republicans.