(Bloomberg) -- The presidency of Donald Trump may end up being a uniquely good time to add green investments, according to Hamish Chamberlayne, head of global sustainable equities and a portfolio manager at Janus Henderson Investors.
“While market sentiment is negative and there are understandable expectations for a slowdown in sustainability-related investment themes, we believe, if history is any guide, we could actually be approaching a compelling time to invest,” Chamberlayne said in an article published on the Janus Henderson website.
The assessment follows a deep selloff of traditional green assets, including wind and solar. Investors then responded to the Nov. 5 election result by dumping stocks they feared would be pummeled by Trump’s policies. The president-elect has made clear he regards climate change with skepticism, that he intends to wind back Biden-era green policies such as the Inflation Reduction Act, and that he wants to ratchet up fossil-fuel production.
But investors should take some comfort in the fact that Trump’s rhetoric hasn’t historically been matched by equivalent action; that, combined with low valuations across the green-asset spectrum, means the sector may do a lot better in the coming years than many investors currently expect, Chamberlayne said.
“Reflecting on the first Trump term, fears didn’t match reality,” he said. “Despite potential negative policies towards ESG (environmental, social and governance) and sustainability, we don’t foresee significant impacts.” That’s in part because companies operate on timelines that are longer than four-year presidential terms, which means they’re likely to maintain their commitment to sustainability, he said.
Chamberlayne notes that clean-energy investments are now close to $2 trillion annually — almost twice as much as is allocated to new oil, gas and coal projects — while “post-pandemic, clean-technology costs are dipping again.”
And Trump’s “pro-growth, pro-business stance, including lower taxes, is likely to boost corporate investment and consumer demand, creating a favorable environment for equities,” he said. “Moreover, should inflation return, it could further encourage investments in efficiency and productivity.”
Janus Henderson is focused on “investing in companies that aren’t dependent on government subsidies, recognizing that sustainability must be economically viable on its own,” Chamberlayne said. “By concentrating on companies offering valuable goods and services to the planet and people, we believe strong opportunities remain to continue compounding wealth through a range of political backdrops when assessed through the right lens.”
Importantly, the global shift toward electrification and digitalization is now “irreversible,” according to Chamberlayne. And China’s current leadership in clean-energy production and innovation underscores “the importance of gaining exposure to these long-term investment themes,” he said.
Perhaps ironically, green stocks thrived during Trump’s first stint in the White House, with the S&P Global Clean Energy Index rising more than 250% between the beginning of 2017 and the end of 2020.
“History shows that sustainability-focused investments can thrive even under administrations less focused on climate goals,” Chamberlayne said.
(Adds context of green-stock performance during Trump’s first term, additional comment from Chamberlayne in final paragraphs.)
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