AGF U.S. Energy Transition and Adaptation Strategy
Approach
Thematic, Fundamental, Bottom up
Cap
All-Cap, Agnostic
Benchmark
Solactive U.S. Energy Transition and Adaptation Opportunities Index
Inception Date
February 2023
Key Reasons to Invest
1
Focused on full cycle, long-term secular opportunities with a targeted approach to identify companies that we expect to be beneficiaries of the multi-decade energy transition and adaptation evolution.
2
Invests in solution providers including power infrastructure, carbon capture, energy storage, hydrogen, materials, sustainable fuels, and flood or fire mitigation companies* that we believe will grow and successfully contribute to the energy transition and infrastructure adaptation.
3
Our differentiated process seeks well positioned companies that offer solutions to help with the transition of energy systems and improve the resilience of infrastructure from an adaptation perspective.
Overview
Strategy
The strategy's objective is to provide long-term capital appreciation by investing primarily in equity securities of companies providing solutions related to reducing the environmental footprint of the current energy system and adaptation to climate change.
Philosophy
The need to transition and update the North American energy system towards more efficient technologies has been well established in government legislation and corporate intent and actions. We believe this transition provides very attractive long-term opportunities given where capital is being spent. U.S. laws, namely the Inflation Reduction Act, the CHIPS Act and the Infrastructure Investment and Jobs Act provide sizeable incentives to promote capital spending.
Process
The Strategy aims to provide investors with exposure to the multi-decade energy transition and adaptation currently underway. In conjunction with Solactive, AGF has helped to create the Solactive Energy Transition and Adaptation Opportunities Index to track the performance of the transition and adaptation landscape. Solactive’s Natural Language Processing (NLP) tool called ARTIS, was used to help identify the universe that captures different opportunities within energy transition and adaptation and goes beyond the typical rules-based index construction approach.
The manager will assess fundamentals, business maturity, policy, macro drivers and market perception to identify companies we believe have attractive growth prospects. In addition, assessing technological advancements, the competitive landscape and cost decline trajectory are also critical inputs in stock selection. The result is a differentiated portfolio of 10 to 30 holdings from all capitalization ranges.
Investment Process
- Identify potentially attractive investment opportunities defined by on-going energy transition and adaptation in North America.
- These opportunities are underpinned by changes in energy technology solutions, regulations, policies, and the competitive landscape.
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1. Create Investment Universe
- Identify publicly-traded companies whose business are the main drivers and financial beneficiaries of North America's energy transition and adaptation.
- This will include both pureplay disruptors and incumbent energy solutions companies.
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2. Security Selection
- Employ thematic and fundamental analysis to identify companies we believe are best positioned to benefit within each energy transition and adaptation theme.
- Evaluate market perception relative to potential to identify opportunities.
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3. Portfolio Construction and Ongoing Stewardship
- Initiate positions scaled to solution strength, conviction levels and risk attributes.
- Emphasis is on the long-term potential of capital deployment. Near term market dynamics are a secondary consideration but useful for weighting.
- Corporate transition efforts will be the focus of ongoing engagement.
- 10 – 30 investments.
Investment Team
Martin Grosskopf manages AGF Investments’ sustainable investing strategies and provides input on sustainability and environmental, social and governance (ESG) issues across the firm’s investment teams. He is a thought leader and a frequent public speaker on ESG and Green Finance issues. He serves as Vice-Chair of the CSA Group technical committee on Green and Transition Finance and is a past member of the Responsible Investment Association (RIA)’s Board of Directors.
Martin has more than 30 years of experience in financial and environmental analysis. He previously served as Director, Sustainability Research and Portfolio Manager with Acuity Investment Management Inc., which was acquired by AGF Management Limited in 2011. Before joining the financial industry, Martin worked in a diverse range of industries in the areas of environmental management, assessment and mitigation. He was a project manager with CSA International from 1997 to 2000 and, prior to that, served as an environmental scientist with Acres International Limited.
In 2023 Martin was a recipient of the Canada Clean16 Award for his work furthering sustainability in the financial sector. Martin obtained a B.A. from the University of Toronto and an MES from York University, and earned an MBA from the Schulich School of Business.
Portfolio Manager under AGF Investments Inc. and AGF Investments America Inc.
Abhishek Ashok
M.A., MFE, CFA®
Richard Fisher
M.A. (Econ.)
Ling Han
M.Sc., MBA, CFA®
Grace Huang
MBA, CFA®
John Kratochwil
MBA, P.Eng.
Henry Kwok
MBA
Lazar Naiker
Pulkit Sabharwal
MBA
Wai Tong
MBA, P.Eng., CFA®
Wyeth Wright
CFA®
Lillian Zhang
MBA, CFA®
Manna Neghassi
The AGF Equity Analyst Team consists of individuals from AGF Investments Inc. Personnel of AGF Investment Inc., an affiliated adviser located in Canada that is not registered with the SEC, provide research services to clients of AGF Investments America Inc through an Affiliate Resource Arrangements.
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
*Subject to change