Oil Price Fall Creates Ethical Investment Opportunites

Governments are realising in the instances of energy efficiency, water saving and some of the renewables, the environmental choice can also be the economic choice

Emma Wall 11 December, 2014 | 1:29PM
Facebook Twitter LinkedIn




Emma Wall: Hello and welcome to the Morningstar series 'Why Should I Invest with You?' I'm Emma Wall and here with me today is Charlie Thomas, Manager of the Jupiter Ecology Fund. Hello Charlie.

Charlie Thomas: Hello.

Wall: I thought that we kick off by talking about the oil price. It's going down. It has been going down for some time. This is bad news for lot of fund managers, but is this presenting opportunities for you.

Thomas: It's interesting, it's an interesting question. A lot of people perceive that with the oil prices going down its going to have an impact particularly into those sectors that we look at, such as renewables and energy efficiency. Interesting enough what you got to understand is that the oil price is not necessarily driving the power price. And actually the gas price has been much less affected. That is actually good thing for the renewable sector and actually if we find sentiment falling away in some of the renewable energy sectors then actually it could be a bonus for the sector and we would look to actually increase our position to those sectors.

Wall: So contrary to perhaps people’s understanding renewables’ share prices are going down as well as oil prices.

Thomas: Yes, it's more of a sentiment issue. And we recognize much less effective than the oil companies per se. But there is sentiments have run across. But actually for us that presents as I said presents bang opportunity and we are looking quite proactively at the moment into the sector.

Wall: Absolutely, pick up things as they are a bit cheap.

Thomas: Exactly right.

Wall: And what are perhaps the other opportunities within the sort of ethical ecology sector.

Thomas: What we are seeing as we come to the year end is a lot happening in the policy debate. This an area that has actually been quite subdued for the last couple of years. But I would point to some very important conferences particularly in 2015 notably in Paris in November time which was a big climate change debate. Here we've seen huge amount of progress from where we stood about a year ago and in fact we've seen a very important, what we believe a very important deal between China and the U.S. in terms of cooperating more openly around climate change. Now that’s very important for the sector and global emissions generally because they account for over half the global emissions.

Wall: I think with these things sometimes the fear is that you are just playing lip service to the promises, to the intentions, but as the global growth has improved they are in a position to actually do something about it.

Thomas: They are, and I think there is another feature which also playing at hand. I think a lot of people have this pre-conceived idea that it's environmental choice versus the economic choices one or the other. Actually that’s increasingly not the case we are finding. That actually in the instances of energy efficiency, water saving and indeed some of the renewables the environmental choice can also be the economic choice and if that continues and persists actually that’s a very good driver for the whole sector over the next few years.

Wall: And the companies that you are investing in do they have exposure to this kind of market? Are they very U.K. centric? Or are they global and able to capture those promises that China is making?

Thomas: We've always taken a very global approach to investing in environmental companies. And very much the ecology fund is focusing on the companies providing solutions to the environmental challenges. So we're very much geared into that opportunity and we see a multitude of opportunities certainly the growth in the emerging markets over the longer term and indeed dealing with old and ageing infrastructure in Europe and North America both present good opportunities.

Wall: Charlie, thank you very much.

Thomas: Thank you.

Wall: This is Emma Wall for Morningstar. Thank you for watching.


The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

About Author

Emma Wall  is former Senior International Editor for Morningstar

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures