Market review

Equity markets demonstrated resilience through the close of 2025, buoyed by the widespread expectation of continued interest rate reductions by central banks throughout the following year. Disinflationary trends have fostered this benign outlook. The anticipation of ongoing Federal Reserve (Fed) monetary easing drove precious metals prices to new highs, while the US 10-year Treasury yield finished the period at 4.17%, basically flat quarter-over-quarter.

Strategy performance

Lumentum Holdings and Coherent, key providers of optical networking equipment for AI infrastructure, climbed to all-time highs. Market participants expect a structural supply-demand imbalance for their optical products to continue past 2026, providing a long-term tailwind for both companies.

The energy infrastructure company Siemens Energy benefited from a strong message at its Capital Markets Day highlighting the company’s long-term profit growth and free cashflow generation potential.

Other positive contributors included Renesas Electronics, HD Hyundai Electric and Delta Electronics.

LG Energy Solution underperformed during the fourth quarter of 2025 as the South Korean battery leader faced mounting pressure from a cooling global electric vehicle (EV) market. Meanwhile, the company starts 2026 with a strong AI infrastructure catalyst. Demand for its large-scale energy storage systems is accelerating, providing a structural growth tailwind that offsets broader automotive volatility.

Eos Energy Enterprises, a US manufacturer specialising in proprietary zinc long-duration energy storage systems (ESS), saw its stock recede as investors adopted a cautious wait-and-see stance. This investor behaviour reflects the company’s current status as it executes a planned, steep ramp-up of its production activities in Q4 2025. 

Taiwanese semiconductor firm Silergy, a key player in analogue and power management chips, saw its share price decline as its Q4 fundamentals only showed incremental improvement. The slight uptick in performance failed to satisfy investor expectations for a more robust rebound across its end markets.

Other negative contributors included UBTech Robotics, SG Micro and Lynas. 

Strategy activity

The strongest exposure remained to the ‘Energy efficiency’ cluster. 

We reduced the weighting in the ‘Energy efficiency of big data’ subcluster. We initiated a new position in Coherent, a manufacturer of materials and optical components for data centres and communications as well as industrial end markets. We reduced positions in Marvell Technologies, Broadcom, Lumentum Holdings and Alchip Technologies and sold our holding in IonQ.

The weighting in the ‘Industrial efficiencies’ subcluster remained unchanged. We initiated a new position in Panasonic Holdings, a Japanese electronics leader with an expected free cash flow generation. Growth is expected to be driven by battery backup and capacitor bank units for AI data centres. We increased positions in Siemens and SAP, trimmed Lynas, UBTech Robotics and Delta Electronics, and sold Dassault Systèmes and Keyence.

Our portfolio maintains considerable exposure to the AI theme…we anticipate the coming years will be decisive in determining the leaders of the AI race, expecting significant capital expenditure allocations to persist across the industry

We reduced exposure to the ‘Energy efficiency of buildings’ subcluster by selling Owens Corning, Autodesk and Installed Building Products, lowered our positions in Procore Technologies and Nemetschek, and increased our exposure to Legrand.

In the ‘Transportation’ subcluster, we increased positions in NXP Semiconductors and Amphenol.

We slightly reduced exposure to the ‘Energy transmission and distribution’ cluster. We initiated a new position in Huaming Power Equipment, a leading transformer tap changer producer from China, with its growth increasingly driven by exports. We reduced our holding in GE Vernova, sold the two remaining positions in grid operators Terna Rete Elettrica Nazionale, Redeia (Red Eléctrica) and Elia Group, and increased our holding in Hydro One. We also sold our position in ITM Power. 

We increased our exposure to the ‘Energy storage’ subcluster through initiating two new positions, Eos Energy Enterprises and LG Energy Solution. Eos Energy Enterprises is an emerging US manufacturer of proprietary zinc ESS, offering long-duration energy storage. LG Energy Solution is a leading lithium-ion battery producer from South Korea, benefiting from very strong growth rates in US ESS. 

Inside the ‘Power conversion’ subcluster, we increased the positions in Analog Devices, STMicroelectronics and ON Semiconductor, and reduced those in Monolithic Power Systems and SG Micro. 

In the ‘Clean power generation’ cluster, we initiated a new position in First Solar, a US-based thin-film solar module manufacturer, profiting from its unique domestic manufacturing footprint. We sold Boralex, a Canadian renewable energy operator. 

Market outlook

Propelled by the ongoing buildout of AI data centres and networking hardware, the US economy continues on a resilient path into 2026. With recent inflation figures showing signs of cooling despite tariff-related friction, the Fed is broadly expected to deliver further rate cuts this year, which should remain a constructive tailwind for equity markets.

We maintain a highly constructive view on the core themes guiding our investment strategy and continue to focus on identifying diversifying opportunities across the entire clean energy value chain. We prioritise segments exhibiting robust structural growth driven by global electrification efforts, specifically targeting clean power generation, smart grid and energy storage solutions, power electronics, the electric vehicle ecosystem (including charging infrastructure), humanoid robotics, electric heat pumps, and improving the energy efficiency of Big Data infrastructure. 

Our portfolio maintains considerable exposure to the AI theme, strategically weighted towards technology enablers that improve data-processing efficiencies and essential electrical infrastructure suppliers. We anticipate the coming years will be decisive in determining the leaders of the AI race, expecting significant capital expenditure allocations to persist across the industry. Concurrently, we have initiated positions within the emerging humanoid robotics supply chain – a new segment projected for strong structural long-term growth – targeting companies delivering energy efficient solutions within this burgeoning field.