Munro Partners’ Climate Change Leaders Fund has delivered impressive returns since its launch five years ago, with an annualized gain of 121 percent, significantly outperforming the MSCI All Country World Index, which recorded a 78 percent return over the same period. The ASX-listed fund, valued at approximately A$381 million, focuses on companies aligned with decarbonisation efforts across sectors including renewable energy, battery technology, water recycling, and clean grids.
James Tsinidis, the portfolio manager overseeing the fund, highlights the transformative shift in the US electrical contracting sector that underpinned one of the fund’s most successful investments. When Tsinidis initially advocated for purchasing shares in Quanta Services, a US electrical contractor, his idea faced skepticism, especially from Munro’s chief investment officer Nick Griffin, who had witnessed numerous engineering contractors fail due to fixed-price contracts in the oil and gas industry. However, Tsinidis identified a market change: an ageing US power grid, rising clean energy demand, and a shrinking skilled labour pool created pricing power for contractors like Quanta. This enabled the company to secure more profitable contracts, even when projects exceeded initial budgets. Quanta’s shares have since increased more than fivefold, rising from around US$140 in 2022 to approximately US$607 recently, including a 44 percent surge this year.
The fund maintains a concentrated portfolio of 15 to 25 stocks primarily from the US and Europe, targeting firms with at least half their revenue tied to climate and clean-tech initiatives. While not all investments have yielded straightforward gains, Tsinidis notes challenges as well. For example, Chinese battery manufacturer Contemporary Amperex Technology Co. Limited (CATL) presented hurdles. Despite CATL’s significant investment in research and development and prominence in the electric vehicle battery market, intense domestic price competition in China eroded profit margins. Munro typically approaches Chinese domestic listings cautiously, given the rapidcyclical and regulatory changes in that market, but believed CATL was essential to capturing battery industry growth globally. The fund entered CATL’s Hong Kong listing last year near HK$263 and exited recently around HK$350, navigating notable recent share price volatility.
The fund also benefits from exposure to companies supplying critical infrastructure for data centres, a sector not directly classified as clean technology but integral to the fund’s mandate. Munro’s holdings in electrical equipment giants such as ABB and Schneider Electric have provided stability amid investor concerns about future data centre expansion and financing costs. Both companies have reported strong earnings with robust order backlogs, offering reassurance about underlying demand.
In the technology sector, Nvidia holds an increasing share of the fund, comprising just under 7 percent of the portfolio. Typically, green portfolios avoid technology stocks, but Tsinidis cites Nvidia’s relative energy efficiency and strong cash flow, underscored by a significant share buyback program, as reasons for its inclusion. After trimming exposure earlier this year, Munro added aggressively to Nvidia during a recent price dip, viewing it as a resilient, long-term investment despite overall market volatility.
Munro employs a disciplined risk management strategy with a strict stop-loss rule, requiring a formal team review if any holding declines 20 percent from its peak or purchase price. This framework fosters timely exits from positions such as PayPal and Boeing in past years, protecting the portfolio from prolonged downturns.
Looking ahead, Tsinidis identifies several companies poised for growth driven by structural trends. US utility NextEra Energy, a top-three holding at 8.2 percent of the fund, continues to report around 10 percent annual growth through wind and solar development despite recent yield-driven valuation pressures. Similarly, German energy firm Siemens Energy, active in gas turbines, wind power, and grid infrastructure, trades at a notable discount compared to US peers despite robust European investment in electrification. After Munro’s 2024 purchase near €50 per share, Siemens Energy’s stock climbed to €136.
Another standout performer is GE Vernova, a power generation business spun off from General Electric in late 2024. Acquired near US$130 per share, the stock has risen sharply to about US$878, reflecting the company’s stable, long-term service contracts and structural market defense.
Overall, Munro’s Climate Change Leaders Fund combines targeted sector exposure with rigorous risk controls and tactical trading, positioning it to capitalize on ongoing global decarbonisation and infrastructure modernization trends.