2023 was a great year for Climate Tech investors
In the last 18 months, I have been working more actively on managing and defining a securities portfolio.
I aimed to create a portfolio reflecting my values and investment philosophy.
I would describe myself as a “Growth value investor”. I buy and hold securities for the long term (over several years). I do not buy derivatives and do not short stocks.
I am investing in companies positioned in fast-growing markets, but I also want to invest at a fair value.
Buying “growth companies” at fair value is a real challenge as the market consistently prices in its growth expectations. Consequently, growth companies always have higher valuations and are generally more expensive. I try to buy these stocks when the market undervalues them.
I also consider myself an “ impact investor.” I invest in companies that deliver positive impacts to society.
My primary motivation when creating my portfolio was to exclude specific sectors I did not want to support with my money. These sectors were all fossil fuels, tobacco, and military supply.
It is complicated to exclude these sectors as most indexes and associated ETFs will have a solid exposure to them (especially for fossil fuels). Very few asset managers have excluded O&G activities from their investment strategies.
My current investment strategy relies on four dimensions, I named it the “ 4Gs” portfolio. It reflects my area of interest and past experiences. The 4Gs stand for :
- Gray or Healthcare Tech: These companies provide products and services to cater to our aging population. 40–45% of the portfolio.
- Green or Climate Tech: companies providing products and services that support climate mitigation and the energy transition. 35–40% of the portfolio.
- Gratification or Generational Tech: companies providing products and services to please/entertain people from all generation. 15–25% of the portfolio.
- Global: I invest in stocks all over the world. My focus is on the company and its products/services rather than its country of origin. It means my portfolio includes securities from the EU, US, China, Japan, Korea, India, etc… It also means the portfolio consists of several currencies. Exposure to non-US, non-EU listed securities represents 10–15% of the portfolio today.
I use simple tools to manage my portfolio, only Yahoo Finance, Simply Wall Street, and Excel. I rely on the quarterly and annual reports of the companies. I participated in the earning calls as often as possible. I read extensively about the portfolio companies and their competitors.
It took me some time to create the right setup to measure my performance effectively. 2023 is the first year I can do that more effectively.
My portfolio includes between 40 and 50 lines. I do monitor another 20–30 companies as potential next investment. I follow another 100–150 listed companies, mainly Climate Tech related.
All dividends are reinvested in the portfolio to compound. Below is an overview of the portfolio’s 2023 performance.
The below charts show the performance of the portfolio in 2023 in Euro currency.
At the end of the year, the ‘4Gs’ portfolio ends up at +19%, just below the S&P500’s performance and on par with the EuroStoxx 50.
I am pleased with the volatility/Beta of the ‘4Gs’ portfolio, which is close to the S&P 500's.
Climate Tech had a volatile year but ended up with a roaring (+25%).
Health Tech performed less at ‘only’ 11% but better than the overall Healthcare sector of the S&P 500.
Generational Tech (+29%) has been the best-performing sub-portfolio this year due mainly to the performance of its tech companies.
The ‘4Gs’ portfolio performance was negatively impacted by the performance of the non-US-EU companies (mainly China in fact). Chinese equities suffered extensively in 2023. And most Asian currencies have been very weak in 2023 compared to the USD and Euro.
At the beginning of 2024, the fifteen biggest holdings of the ‘4Gs’ portfolio are: Air Liquide, Alphabet, Apple, EssilorLuxoticca, General Electric, Kering, Longi Green Energy Technology, LVMH, Microsoft, Netflix, Next Era Energy Inc, Schneider Electric, Tesla, Sonova, and Waste Management.
People often ask me why I like managing my portfolio and making such investments.
I find it a fascinating intellectual exercise as it requires accumulating and analyzing a lot of information about the world: technologies, companies, markets, and all other various forces that influence our societies and economies.
It is also a fantastic personal exercise for self-awareness. Investors need to have an excellent understanding of themself to understand how their biases and emotions can influence their decisions. Investors need also to be aware of others’ emotions and biases.
It is difficult to not fall down this fantastic rabbit hole!
Let’s see what 2024 has to offer!
NO INVESTMENT ADVICE
The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in my article constitutes a solicitation, recommendation, endorsement, or offer by me or any third-party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content on this post is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the Site constitutes professional and/or financial advice, nor does any information on the Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto.
INVESTMENT RISKS
There are risks associated with investing in securities. Investing in stocks, bonds, exchange traded funds, mutual funds, and money market funds involves the risk of loss. Loss of principal is possible. Some high-risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including greater volatility and political, economic, and currency risks and differences in accounting methods. A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.
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