Bericht des Fondsmanagements (Stand: 30.04.2019)
The sector performed in line with the MSCI World in April. The fund is well ahead of both the sector and MSCI World YTD. Risk appetite and liquidity in the market is still very strong after the strong selloff towards the end of 2018. DNB Fund Renewable Energy had a strong month in April outperforming the MSCI World and sector index marginally. Sector attention seems to be growing, illustrated by positive broker comments on First Solar (#2 fund position at 6.6%), the top contributor in April. Brokers are increasingly more optimistic in terms of capacity buildouts and volume outlook, this make sense given the attractive economics for the companys Series 6 solar production. Perhaps one of the key points in April for the fund was the avoidance of any major negatives. All negative contributors this month were quite small. We are in the middle of a challenging reporting season, so we are likely to have both good and bad news when reporting next month. It was a busy month from a trading perspective and we initiated in two names, namely Iberdrola and Adecoagro. Iberdrola is a high quality integrated utility with solid renewable growth outlook (including offshore wind) and attractive relative valuation. Adecoagro is a low cost Brazil ethanol producer very attractively positioned geographically. The company has invested heavily for a number of years positioning it attractively now ahead of the growing ethanol demand in Brazil. The fund is trading at a valuation discount to MSCI World, despite offering higher expected earnings growth. The fund currently trade at 9.3x, which is also towards the lower end of the historical range. The growth in renewables are to a large extent structural, and perhaps less cyclical than what the market is discounting. Climate change evidence and cost is growing. The sector is also increasingly cost competitive. Many names in the portfolio will also deliver strong cash flow growth in 2019 and beyond. Based on this we consider risk/reward outlook to be positive.