Stockholm (NordSIP) – Active Niche Funds, a Swiss investment management company, announced a strategic partnership with Intervalor to market its actively managed equity funds in renewable energy in the Nordic region. Active Niche Funds are now entering the Nordic market with their solar sector fund, Active Solar.
Based in Lausanne, Active Niche Funds was established in 2007 by CEO Pascal and Philippe Rochat who are its sole shareholders. The team currently counts seven employees, out of which three investment managers, and is supported also by external scientific and technological expert Professor Christophe Ballif, Director of Photovoltaics Laboratory at EPFL and CSEM.
Intervalor Nordic Partnership
The Active Solar Fund will be available to institutional investors and distributors as a Luxembourg based UCITS fund upon registration. The funds are in the final process of being duly registered in Scandinavia. In addition, the funds will be available on the MFEX platform as well as other platforms to be chosen.
“We are thrilled to expand our distribution into the Nordics in a long-term partnership with Intervalor. The growth prospects for solar energy are huge in a time where most industrialized countries are targeting to achieve ‘net zero’ emissions by the middle of the century,” Pascal Rochat (Pictured), CEO Active Niche Funds, comments. “Being already the cheapest source of electricity in most countries, solar is the main driver for decarbonising power production. We very much look forward to meeting investors and distributors to present Active Solar in more detail together with Intervalor.”
The Active Solar Fund
Launched in 2008, the Luxembourg Selection Fund (LSF) – Active Solar fund was the first daily traded equity fund investing in the global solar sector and is classified as a dark green SFDR Article 9 investment. The fund is part of the UBS Luxembourg Selection Fund UCITS umbrella, invests only in liquid stocks across the chain of polysilicon used in solar panels and is managed by Rochat and Arnaud Chambaud. The fund will be available to institutional investors, distributors and private investors in US Dollar and Euro share classes upon registration.
Active Solar currently invests in 23 companies, taken from an investment universe of 80 companies across the solar PV value chain. “The fund is therefore built on high-conviction stocks and we do expect the number of holdings to stay below 30. The solar companies are mainly based in Asia (about 45% of our exposure). The USA accounts for 33% of the fund and Europe 22%. However, 60% of our companies are listed in the US,” Rochat tells NordSIP.
“We have a long-term investment philosophy. However, the solar market went through crises and transformations that did change significantly the investment universe and our portfolio. In addition, we manage very actively the portfolio according to our risk/return approach, which means many upgrades and downgrades within a year. Therefore, the investment turnover volume is quite high,” Rochat adds.
The fund aims to invest in the best solar companies worldwide by linking the investment process with the results of fundamental analysis (bottom-up) with Active Niche Funds’ global understanding (top-down) of the key market and technology drivers. In addition, the asset manager weighs each portfolio holding with the risk/return profile of the company. The risk is an aggregate of three different risk categories: Financials, Competitive Edge and ESG, according to Rochat.
A Turbulent Start
“Active Solar went through quite a wild ride as it was launched at the beginning of the solar photovoltaics (solar PV) industry in September 2008 and suffered an immediate drop with the financial crisis and the stock market crash. In the early years, the solar market was essentially Germany and Italy and it was subsidised,” Rochat says.
“In 2011, a big overcapacity plagued the market with the Chinese solar panel manufacturers massively increasing production capacities. It led to a price war that saw sales prices of solar panels drop 50% in 2011 and again 30% in 2012; many companies went bankrupt in the aftermath of this crisis. As investors did not want to invest in solar stocks at this time, Active Solar was severely hit and reached a low at -90%,” Rochat adds.
However, Rochat thinks the crisis was positive. “In retrospect, it allowed solar PV to become what it is today: a large worldwide market competitive without subsidies. The power produced by solar PV today is 10 times cheaper than it was 10 years ago. Solar PV entered a new cycle in 2017 with both technology and industry becoming mature; Active Solar performed extremely well since then and was multiplied by 4. Over the last 3 years, Active Solar was among the best performing funds worldwide,” he says.
According to Rochat, the pandemic had only a limited impact on the solar market. “Before this crisis, we were expecting new solar installations to reach 160 GW in 2020 and they ultimately reached 140 GW, which is still a +20% growth compared to 2019. Most of the delayed 2020 projects are being developed in 2021 when we expect a very strong growth with 190 GW of new solar PV capacities.”
“The crash of March 2020 did obviously hit our stocks, but it gave us some excellent rebalancing opportunities. And the aftermath of the crash proved to be one of the strongest rises of our solar stocks allowing Active Solar to return +183% in 2020,” he concludes.
Image courtesy of Active Niche Funds