In the latest newsletter from the Fundamental Growth & Core Equity team, Chief Investment Officer Mike Solecki’s foreword looks at the recent investment environment and the major factors driving recent financial market performance and considers what that might mean going forward.
The two main articles in the newsletter provide insights into what the team considers when seeking investment opportunities:
Below the Radar: Three Innovation Stock Stories
The Global Innovation Strategy seeks to build a concentrated portfolio of companies at the forefront of innovation, in a diversified, risk-controlled way. We favor companies with high-quality business models, reasonable valuations, and sustainable growth driven by innovative products and solutions. More specifically, we define innovative companies as those that create new markets, disrupt existing markets, leverage the network or platform effect (as we illustrate later), and drive productivity enhancements, scientific breakthroughs and new solutions.
Inflation Reduction Act: Pathway to a Lower Carbon US Economy
The Inflation Reduction Act 2022 includes a number of substantial measures to help the US in its transition to a lower carbon economy. It is set to have a considerable impact on the climate change strategies of many industries and companies. This Act is considered to be the strongest climate action in US history and aims to address inflation by reducing national debt, healthcare costs, and energy costs over the next ten years. On the climate change front, the law encompasses provisions that touch on a mix of energies, including wind, solar, nuclear, hydrogen, oil and gas, biofuels; it also includes climate change prevention measures such as carbon capture, battery storage, clean vehicles etc. Overall, an estimated $369 billion of investment is expected in the areas of energy transition and climate change over a period of 10 years.
The IRA offers an array of incentives and tax credits to the industries which will not only help in decarbonization but will also present a great investment opportunity. The Fundamental Growth and Core (FGC) Equity team at State Street Global Advisors believes that the IRA will provide incentives for the development and maturation of technologies which are critical in mitigating climate change. By leveraging the FGC proprietary climate score cards we can identify companies that will provide the key technologies to enable the transition to a Net Zero world.
This information is for informational purposes only, not to be construed as investment advice or a recommendation or offer to buy or sell any security. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. There are no guarantees regarding the achievement of investment objectives, target returns, portfolio construction, allocations or measurements such as alpha, tracking error, stock weightings and other information ratios. The views and strategies described may not be suitable for all investors. SSGA does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision. Investing entails risks and there can be no assurance that SSGA will achieve profits or avoid incurring losses.
Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted.