As President Trump continues to dominate the news, Chinese start up DeepSeek entered the global artificial intelligence scene and interest rates are expected to remain elevated, we have taken the opportunity to make changes to our tech sector exposure across the Climate Assets strategy.
Concentrated around the technology sector
The market continues to be highly concentrated around the technology sector, particularly the Mag7. Thus, to better manage our relative performance risk we have decided to reduce our active underweight against tech, as not owning the Mag7 in 2024 was very costly to relative performance. However, it is worth noting that Amazon, Google, Meta and Tesla remain ESG laggards and thus they continue to not be suitable for the strategy.
Following the January sell-off in artificial intelligence-focused names, we added Nvidia after it fell nearly 20%. We also initiate a position in Apple and added to our existing holding in Microsoft. These changes allow us to increase the exposure to technology to reduce our active underweights against the sector and thus protect against relative performance. The January sell-off offered on balance a good entry point to make such a change. Also, the recent implemented Sustainable Disclosure Requirements (SDR) framework allows the strategy to invest up to 30% in ‘non sustainable’ assets, such as Apple. Whilst Apple is a well-managed company marketing mobile phones and personal computers, it has a negligible SDG revenue alignment, as such it now sits within “Other Non-core Investments” as allowed by SDR. Apple does not contribute to any of our investment themes, but it is a good diversifier within the technology space.
Driven by the macroeconomic backdrop, we also initiated positions in insurance company Allianz and testing & certification company Intertek. These latest additions have increased our end market diversification away from industrials.
Author
Caroline Langley
Investment DirectorI have over 16 years of experience in the private client industry and 14 of those are with Quilter Cheviot where I have worked since 2006. I manage private client portfolios (taxable accounts, ISAs and JISAs, trusts, SIPPs, small charities and offshore bonds) working with clients directly or alongside advisers. I am also Deputy Fund Manager for the award-winning Climate Assets Balanced Fund and the Climate Assets Growth Fund.
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Climate Assets Funds
The Climate Asset Funds invests in companies that make a positive contribution to the world, with a strong underpinning of ethical values.