„Smart Energy“ is the magic word

Since mid-April 2020 there is another sustainability fund in the product range of Raiffeisen KAG, the Raiffeisen Smart Energy ESG Shares. The launch of the new energy fund was a logical consequence of the emerging urgency in the fight against climate change, or more precisely against CO2 emissions. After all, floods, forest fires, mass migration and the destruction of biodiversity are just some of the consequences if we fail to get global warming under control. „To keep global warming below two degrees Celsius by the year 2100, only 600 gigatons of greenhouse gases may be emitted worldwide. Currently, the world consumes 55 gigatons per year, which means that in eleven years this „residual budget“ would already be exhausted. The energy sector produces two thirds of the greenhouse gases. Emissions must therefore be brought down very quickly, and this can only be done by consistently driving forward the energy turnaround. A lot of money has to flow into renewable energies, which is why this fund is perfectly suited to the sustainable product range,“ says fund manager Hannes Loacker.

Approach

The energy turnaround with its manifold aspects is the basis for the concept of the Raiffeisen Smart Energy ESG share. On the one hand, the globally oriented fund invests in companies that actively support the energy turnaround. On the other hand, companies are of interest that use intelligent technologies to ensure that energy resources can be used more efficiently. The fund thus reflects the stock market developments in these sectors. „The fund differs from the classic reference values that only invest in utilities – i.e. wind or solar power. In principle, there are three major sectors that cover 90 percent of the fund: At just under 40 percent, it is the utilities sector. Then comes the industrial sector with around 30 percent. Here, for example, we focus on companies that ensure more efficient buildings.

In the EU, around 35 percent of buildings are over 50 years old and 75 percent of buildings are considered energy-inefficient. So there is still a lot to be achieved here. And the third focus is on the technology sector, which supplies key components for renewable energies, but also for e-mobility. E-mobility is a fast-growing area, especially since the major car manufacturers want to invest 300 billion dollars in e-models in the next few years,“ says Loacker. The investment universe of „Smart Energy“ comprises the following areas in total: Renewable energies, energy distribution (e.g. smart grids), energy efficiency (green buildings or industrial efficiency improvements), energy management and transport (e.g. battery recycling and the production of more efficient and cheaper batteries for electric vehicles).

Raiffeisen Smart Energy ESG shares aim for a high Raiffeisen ESG score, with the component „E“ – Environment/Environment – being the focus. This means that in addition to financial opportunities, ESG indicators are also taken into account in the evaluation. These indicators relate to CO2 intensity, greenhouse gases produced, energy and water consumption, waste produced and the use of recycled water. The stock selection made in this way – the portfolio is concentrated on around 50 stocks – means that investments in Raiffeisen SmartEnergy ESG stocks leave a significantly smaller CO2 footprint compared to conventional energy funds. Furthermore, the companies invested in the fund consume less water and generate less waste.

Success

The Raiffeisen Smart Energy ESG shares were issued during the lockdown this year. „The good thing was that the stock markets still rose for the most part, which of course helped and resulted in a good performance since the fund was launched, although past performance does not allow any conclusions to be drawn about future developments. The topic of renewable energies has also only temporarily faded into the background due to the lockdown. In the short term, there was fear that governments could reduce their commitment in this area, but this is not the case. Many governments are sticking to their climate targets and the European Commission is pressing ahead with the Green Deal. The fund has therefore developed accordingly…“, says Loacker, pleased with the 30.3 percent increase since its launch.21

Find out more about smart meters here: Experiences with smart meters blog

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