Renewable Infrastructure: An Attractive Opportunity for Investors Seeking Reliable Returns Alongside Wider ESG Benefits

10 second summary

• As part of our commitment to climate change, we tasked our Manager Research Team with looking across the asset class universe to identify whether the issue could be addressed in the form of a fund solution. One area that stood out was renewable infrastructure.

What was the problem?

• Our Manager Research Team wanted to identify investment opportunities that would align with our commitment to climate change.
• Renewable infrastructure was an obvious solution here, however, the growing popularity of this asset class had led to a compression in yields.
• As such, our first task was to assess whether or not the asset class could still deliver sufficient risk-adjusted returns for our clients. As well as identifying whether there were enough managers that could deliver these returns whilst navigate the risks involved – we were very conscious of greenwashing.What was our solution?

What was our solution?

• We conducted a full due diligence process into the global investment strategy universe and met with a significant number of managers across the renewable infrastructure space (all geographies and sectors) to get:
  1. a better understanding of the macro picture; and
  2. understand how managers were seeing the opportunity set.
• Our research largely concentrated on how managers make their returns and whether they are able to manage the risks that are inherent in the renewables space, such as construction & power price risk.

What was the outcome?

• Whilst there are still a significant number of opportunities available within renewable infrastructure, the ‘low-hanging fruit’ no longer exists.
• We compiled a Preferred List of 3 high-conviction global renewable infrastructure managers. We chose to rate global managers because we believe these provide the optimal implementation route for our clients since they are able to assess relative value across different regions and avoid pockets of overheating.

What does this mean for you?

• Renewable infrastructure presents an attractive opportunity for investors looking for a consistent risk-return profile combined with considerable ESG benefits such as the contribution to a net-zero economy, decreased water usage and an indirect impact on employment.