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The Gravis Clean Energy Income Fund targets a 4.5% yield whilst preserving capital with a potential for capital growth. To achieve this, the fund invests in a universe of securities listed in Organisation for Economic Cooperation and Development Nations, or OECD, that focus on clean and renewable energy projects. This will include solar, wind, hydro, energy storage, energy efficiency, bioenergy, smart grid, and geothermal pumps. The types of securities held include closed-ended investment companies, yield co-equities, equities, and fixed income, eg: green bonds. Although referred to as yield co-equities, these are companies listed in North America and Canada that own portfolios of contracted renewable power generation assets with long-dated cash flows.
The Gravis Clean Energy Income Fund invests in a universe comprising securities listed in OECD nations that focus on clean and renewable energy projects. A minimum of 80% of the fund is exposed to operational, either availability-based or contracted renewable energy assets. A maximum of 20% of the fund is exposed to thematic companies involved in clean energy and energy efficiency, for example, supply chain, project funding, construction, and battery storage. These holdings must also have a demonstrable record of generating operating profits. The focus for investment is mature technologies with established track records that have attractive long-term dependable cash flows.
Positions must be income generative with a potential for capital growth to be included. The investment process for the fund can be separated into two parts, one qualitative and the other quantitative, and the advisor uses a combination of the two when assessing an investment opportunity. The qualitative part of the process is also as important as the quantitative. Due to the underlying themes the fund invests in, many controversial sectors are naturally omitted. However, the fund is managed to adhere to a responsible investment statement that clarifies this position. The responsible investment statement covers the areas of impact, ESG considerations, avoidance, and independent analysis within an independent company used to assess the fund to ensure that it’s run in accordance with this responsible investment statement. The Gravis Clean Energy Income Fund is a global fund that invests in developed markets and provides investors with exposure to a growing sector supported by long-dated reliable cash flows that in some cases provide inflation protection. Holdings are multi-currency which can be hedged using derivatives at the discretion of the investment advisor to mitigate foreign exchange-driven volatility. However, the underlying portfolio evaluation can be sensitive to movements in long-dated bond yields as exhibited during the year of 2023, although operationally, the underlying companies were still delivering.
The fund offers investors exposure to a growing sector whilst providing a diversified source of income. This is pertinent as clean technology is at the forefront of many nations’ agendas and is set to grow in the coming years, especially as we move towards net zero. The greatest risk to the underlying exposure is political risk, especially if a government reneges on subsidies, tax incentives, or changes to policy retrospectively. To mitigate this risk, the fund only invests in OECD countries. The responsible investment statement provides clarity to investors in terms of what the fund will invest in, and there is a third party oversight to ensure that this is adhered to.
Important Information
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The information should not be considered as a recommendation, invitation or inducement that any investor should subscribe for, dispose of or purchase any securities or enter into any other transaction with the VT Gravis Funds ICVC, or any other Fund affiliated with the Investment Adviser. The merits and suitability of any investment action in relation to securities should be considered carefully and involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of such securities.
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The VT Gravis Funds ICVC is a UCITS scheme and an umbrella company for the purposes of the OEIC Regulations.
Past performance is no guarantee of future performance.
Gravis Advisory Limited (Registered Number: 09910124) is an Appointed Representative of Valu-Trac Investment Management Ltd, which is authorised and regulated by the Financial Conduct Authority. Gravis Advisory Limited’s principal place of business is: 24 Savile Row, London, W1S 2ES.