Monthly commentary - Mackenzie Greenchip Team

December 31, 2024

Portfolio Manager Monthly Insights

Key takeaways

In environmental sectors, performance and news flow were dominated—as in the broader markets at large—by the accelerating investment in AI, and the impacts of its increasing demand for energy.

Performance of the Greenchip Global Environmental All Cap Fund was hurt during the quarter by weak share prices in solar and utilities, as well as falling foreign currencies (especially the Euro and the Brazilian Real), offsetting continued strong performance in electrical grid equipment and services companies such as Siemens Energy and US firm Mastec.

Macroeconomic recap

Asset market performance in 2024 was remarkable for its magnitude, regional disparity, and concentration in a handful of companies. Investors have adopted a ‘winners-take-all’ approach that disregards any attempt at valuation, continuing to pile into perceived ‘moat’ companies with technological advantages and network-effect quasi-monopolies at any price. Although political turmoil in the US, in combination with aggressive foreign policies and glaring inconsistencies in its ‘rules-based order’, have diminished its economic and cultural power, the continued financial power of the US dollar and control of asset markets has led to regional concentration that is historically unprecedented. Single companies such as Microsoft, Nvidia or Apple are now valued higher than the entire public markets of any individual country other than China and Japan. As the US exploits its financial advantages, and the US dollar increases compared to almost all other major currencies, Donald Trump’s vision of US manufacturing renaissance becomes even more difficult to foresee. Building and producing in the US—already at multiples of the costs in other global regions—is set to get even more expensive on a relative basis. On this MAGA question, and on many of his foreign policy promises (e.g. Ukraine), Trump is certain to face major challenges.

Current positioning and Outlook

In environmental sectors, performance and news flow were dominated—as in the broader markets at large—by the accelerating investment in AI, and the impacts of its increasing demand for energy. The Greenchip Global Environmental All Cap Fund sustained a small loss in December, with weak share prices in solar and utilities as well as falling foreign currencies (especially the Euro and the Brazilian Real) offsetting continued strong performance in electrical grid equipment and services companies such as Siemens Energy and US firm Mastec. At the end of the month the acquisition of our Northeast US utility, Avangrid, by Spanish giant Iberdrola was completed and cash levels are elevated to begin the year as a result. We will be looking to carefully deploy these funds in the first weeks of the year.

Learn more about the team

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

The contents of this document (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) are not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it.

This document may contain forward-looking information which reflect our or third party current expectations or forecasts of future events. Forward-looking information is inherently subject to, among other things, risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed herein. These risks, uncertainties and assumptions include, without limitation, general economic, political and market factors, interest and foreign exchange rates, the volatility of equity and capital markets, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings and catastrophic events. Please consider these and other factors carefully and not place undue reliance on forward-looking information. The forward-looking information contained herein is current only as of December 31, 2024. There should be no expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

This material is for informational and educational purposes only. It is not a recommendation of any specific investment product, strategy, or decision, and is not intended to suggest taking or refraining from any course of action. It is not intended to address the needs, circumstances, and objectives of any specific investor. Mackenzie Investments, which earns fees when clients select its products and services, is not offering impartial advice in a fiduciary capacity in providing this sales and marketing material. This information is not meant as tax or legal advice. Investors should consult a professional advisor before making investment and financial decisions and for more information on tax rules and other laws, which are complex and subject to change.