Investors looking to outperform the market are being urged to look at structural growth, with climate change likely to create the biggest investment opportunity since the internet, an industry expert has said.
During the GSFM media briefing, Munro’s founding partner and chief investment officer, Nick Griffin, urged investors to look for companies that are going to benefit from climate change.
“Now we conservatively estimate this is going to cost $21 trillion over the next 30 years. So, this is going to be the biggest S curve on my investment lifetime. The one before it was the internet,” Mr Griffin said.
“There’s lots of smaller companies that are going to grow over time. It’s a great place to invest over the next 20 years, we’ve seen one explode already in Tesla.”
Mr Griffin explained that the world is moving towards a less carbon-intensive global economy, which should provide a tailwind for investors.
“The decarbonisation of the planet is going to happen. There’s just too many stakeholders that are on board here,” he said.
“It is important to stress when Europe says they want to go to zero carbon by 2050, China says they want to go zero carbon, Microsoft and BHP say they want to go to zero carbon, they aren’t saying admit less carbon – they are saying admit no carbon.”
The fund manager also pointed out that while much of the focus of 2020 has been on COVID, it also saw the world shift towards existing carbon targets.
“We think there was a pandemic last year that got a lot of attention. But there was also countries, companies, councils, states, you name it, announcing zero emission carbon targets,” he said.
Despite predicting that the overall theme of climate change will likely see growth, Mr Griffin reminded investors that they will still be tasked with picking the winners to maximise growth.
“When we are looking for structural growth, we are looking for things that are going to grow double or triple times GDP,” Mr Griffin said.
“If we can do that and find the winners in those areas of structural growth, then we get earnings growth, then you get earnings growth which generally means share price growth. That is effectively how we get excess returns.”