After many twists and turns, the US Senate passed the Inflation Reduction Act (IRA), Joe Biden’s climate (and health) plan. This adoption marks an extremely important step for the investment theme of our M Climate Solutions fund
Initiated in a first version of the Build Back Better plan, this new American plan validates historic measures in favour of the fight against global warming with the release of 370 billion dollars to fight against climate change. One of the main pillars of the plan is the objective of reducing CO2 emissions by 30% to 44% by 2030 (compared to 2005), a trajectory more in line with the Paris Agreement.
The main measures include:
► Tax credits for green electricity and energy storage;
► Tax credits and subsidies for clean fuels and low emission vehicles ;
►Tax credits for renewable energy equipment and domestic production ;
► 10 years of tax credits for individuals to improve the energy efficiency of their homes;
► Tax credits for low and middle income consumers to purchase new and used electric vehicles;
► Over $20 billion to support sustainable farming methods;
► Tax credits to encourage the use of green hydrogen ;
► This reinforces our belief that investors have a role to play and that companies will be part of the solution.
These transition vectors, at the heart of M Climate Solutions’ strategy, should provide significant exposure to IRA spending :
Main areas and expenditures of IRA climate provisions
Source : Committee for a Responsible Federal Budget
This long-awaited plan is a first response to the pressing need to accelerate investment in the fight against global warming, a need that was particularly highlighted in the latest IPCC report. We remain confident that this spending will support the innovations that the planet needs and that we are seeking for M Climate Solutions.
M Climate Solutions
In this context, we believe that the acceleration of US initiatives should be favorable to the theme and consequently to the solutions sought in our three major transition vectors, within our M Climate Solutions fund.
M Climate Solutions, rated SFDR 9, is a thematic global equity fund, targeting European, American and Asian companies that are effectively involved and can generate a real impact in the energy and ecological transition for the climate. M Climate Solutions holds two of the most demanding labels, the Greenfin label, created by the French Ministry of Ecological Transition and Solidarity, and the Belgian Towards Sustainability label, developed at the initiative of Febelfin.
The issues surrounding the global theme of energy are becoming crucial at a time when the Russian embargo is taking place. The need to increase the share of green energy is becoming consensual and should reinforce the attractiveness of the theme.
Since the Russian invasion of Ukraine, the M Climate Solutions fund has significantly outperformed its benchmark.
Between the 24th February 2022 and the 31st August 2022, M Climate Solutions posted a performance of +16.58% vs. +0.78% for the Stoxx Global 1800 NR*. Since its inception (14/11/2019), the fund is up +66.71% vs. +31.07% for its index*.
Source: Bloomberg, Montpensier Finance. All performance figures are as of 31 August 2022. (a) 14/11/2019 *Benchmark. ** Between 24 February 2022 and 31 August 2022. ***Figures quoted relate to periods elapsed. Past performance is not a reliable indicator of future performance. There is a risk of loss of capital in the Fund.
MANAGEMENT OBJECTIVE OF THE M CLIMATE SOLUTIONS FUND: the objective of the fund is to participate in the evolution of the international equity markets by investing mainly in the shares of companies whose initiatives or solutions contribute directly or indirectly to the reduction of the impacts of climate change, or in the shares of companies whose activity is partly related to the evolutions and developments linked to the theme of energy and climate transition. The fund will be positioned on the global markets and will invest mainly in equities and similar instruments up to a minimum of 75%, through a discretionary Bottom Up management approach favouring the search for intrinsic quality of securities.
PRINCIPAL RISKS OF THE M CLIMATE SOLUTIONS FUND: Risk of loss of capital. Discretionary management risk. Equity risk. Currency risk. Sustainability risk. Other risks: risk linked to investments in small and medium capitalisation securities (Small caps), risk linked to the use of derivative instruments, liquidity risk, risk of investing in emerging markets, interest rate risk, credit risk, risk linked to speculative securities, risk linked to convertible bonds, counterparty risk.
WARNING: NON-CONTRACTUAL ADVERTISING DOCUMENT. Before making any investment or disinvestment decision, the client is advised to familiarise himself with the operating conditions and mechanisms governing the financial markets, to assess the related risks and to make use of all the means necessary for a proper understanding of these mechanisms. THE FIGURES QUOTED RELATE TO PAST YEARS. PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE. Past performance is not a reliable indicator of future performance and does not constitute a guarantee of future performance or capital, which may not be returned in full. This document does not constitute an offer to buy, a proposal to sell or investment advice. The securities mentioned may no longer be included in the portfolios of the UCITS managed by Montpensier Finance, and do not constitute a recommendation to invest or disinvest. The decision to invest takes into account all the characteristics, objectives and risks of the UCITS. Before investing, it is recommended that you CAREFULLY READ THE DICI AND PROSPECTUS OF THE UCITS you are investing in. The information contained in this document, obtained from sources that can be considered reliable, has not been verified and Montpensier Finance cannot be held responsible. This document is the intellectual property of Montpensier Finance. The prospectus of the UCITS and the DICI are available from Montpensier Finance and on www.montpensier.com.
AMF approval n° GP 97-125. AMF address: 17, place de la Bourse 75002 Paris – France