Lombard Odier Investment Managers launches Future Electrification Strategy

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Capturing opportunities as the energy system transitions to an electrified model.

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Lombard Odier Investment Managers (“LOIM”) today announces the launch of its Future Electrification strategy. The actively managed strategy aims to capture opportunities associated with new and shifting electrification revenue pools, as the global energy system transitions to an electrified, decentralised, clean and efficient model.

Multiple assets and products in our energy system are reaching or have already reached a tipping point, as innovation and policy have led cost-efficient and functional solutions like electric vehicles, heat pumps or renewable energy. While we have seen other technology-led transitions in history, markets still seem not to price the upcoming “green alpha”[1] opportunity. LOIM’s Future Electrification strategy seeks to harness the momentum behind widespread efforts of economy-wide electrification, capitalising on growing levels of policy support and increasing cost advantages to target strong returns for clients and meaningful progress in the net zero transition.

The Future Electrification strategy follows a high conviction stock selection process, to create a global equity portfolio of 40 to 50 holdings with a bias towards high quality companies with sustainable financial models, business practices and business models that support:

  • Demand - including the clean electrification and enhanced efficiency of buildings, transport and industry and production processes alongside changing consumption patterns
  • Supply - recognising that global energy supply needs to be completely decarbonised by switching from fossil fuels to renewable sources
  • Enablers – including hardware, software and raw materials needed to further enable and accelerate the pace of the transition

Future Electrification is the latest addition to Lombard Odier’s CLIC® franchise, supporting progress towards net zero while fostering regenerative and nature-positive economic foundations, focused on a circular, lean, inclusive and clean economy.

The strategy is managed by Paul Udall, Lead Portfolio Manager, who brings over two decades of experience managing high-conviction sustainability strategies. Paul is supported by Peter Burke-Smith, Junior Portfolio Manager, together with LOIM’s sustainability research and investment teams who provide robust, science-based forecasting and analysis.

Paul Udall, Lead PM of Future Electrification commented: “Electrification is now more than an emerging trend in the climate change race. The growing prominence of the electric vehicle, solar power and heat pumps, illustrate how it has taken hold across global industries. With electrification expected to be the most immediate and impactful solution to climate and energy security crises, our dedicated Future Electrification Strategy will harness rising policy and industry-level support for the energy system’s transition to an electrified model, while capitalising on the profit pools emerging as a result.”

Didier Rabattu, Global Head of Equities at Lombard Odier continued: “We believe that Electrification is set to be one of the biggest system changes in the history of capitalism, with exciting, forward-looking investment opportunities to be found. At Lombard Odier, sustainability is a core investment conviction and this strategy seeks to capture market opportunities, accelerating the current shift towards electrified global energy systems, while targeting robust sustainability-linked returns for our clients.”

[1] We refer to “Green Alpha” where companies are likely to perform better financially in an environmentally-aligned scenario, compared to consensus. To assess green alpha, we assess market tipping points linked to emerging regulation, cost-down curves, and the pricing in of environmental externalities. Based on this analysis, we aim to describe, quantitatively or qualitatively, total addressable market (TAM) potential. Where companies are exposed to TAMs that are likely materially in excess of market consensus, we consider such companies to be exposed to green alpha. Although we believe there are investable opportunities related to these transitions, there can therefore be no guarantee of excess performance.

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