Like the traditional resources sector? Here's why you're gonna love renewables

The Rules of Investing

Livewire Markets

Conventional wisdom holds that 'traditional' natural resource investments are a sure, safe bet. And justifiably so: Land, from which natural resources have been extracted, is one of the classic four factors of production. 

They offer diversification and inflation protection courtesy of increased pricing power when costs go up. 

It doesn't take much to realise the relevance of these attributes in the current environment. 

But here's the thing. Renewables offer all those benefits and more, according to today's podcast guest Lucas White - portfolio manager for GMO's Resources and Climate Change Strategies.

"The broad economy could be struggling, or GDP growth could be flattish or barely growing, but if the world is rapidly transitioning to clean energy, there's no reason why a clean energy strategy couldn't do very well." 

In this episode of The Rules of Investing podcast, you'll also hear why renewable energy will be taking the commodities sector along for the ride, and how GMO filter their clean energy stocks to capture outsized returns. 


This episode was recorded on April 11 2022.

Managed Fund
GMO Climate Change Trust
Global Shares

Timestamps:

  • 1:40 – Lucas' path to GMOs Climate Strategy
  • 3:07 - Jeremy Grantham leading the decarb conversation
  • 6:12 - The case for natural resource equities
  • 12:30 - Renewables and inflation
  • 16:40 - Legacy energy production is critical, for now
  • 12:00 - Renewables depend on commodities
  • 21:50 - Nuclear and gas
  • 29:50 - GMOs Climate Strategy
  • 33:00 - Go equities for your commodities exposure
  • 36:25 - Climate Strategy performance
  • 39:00 - Lucas answers our three favourite questions. 

Reading recommendations:

  • Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street. Available on Amazon and Booktopia.

For an in-depth breakdown of the interview, see my colleague Glenn Freeman's follow up article here

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The Rules of Investing is one of Australia's top investing podcasts. We interview the leading investment minds from Australia and overseas to better understand their processes and philosophy. After launching in October 2017, there have been over...

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