Strategy Spotlight – 2020 Top Performing Strategy (again) – New Power
As we approach the end of 2020, we would like to take this opportunity to review our top performing strategy of the year (and for the last 5 and 10 years!) – The New Power Fund.
New Power Fund – Our High Growth Impact Investing Strategy
First, please allow us a little performance-based cheerleading. As of the end of November, the New Power strategy is up 68% YTD net of all fees. That is not a typo. More impressively, New Power only lost -18% from the first of the year through the final Covid lows on March 23rd, compared to a loss of -30% for the S&P 500. Most growth strategies/ funds/ ETFS tend to experience larger losses compared to the broad market (S&P 500) during corrections and bear markets. But unlike most growth strategies, the simple relative strength process behind security selection in the New Power Fund, does a great job of staying out of trouble during challenging markets. It is difficult to find any diversified investment offering with that return stream in 2020, to be frank.
Is this a single year phenomenon? No
Time Period (ending 11/30/2020) New Power
12 month return +77.42%
3 year average annual +19.77%
5 year average annual +15.20%
10 year average annual +11.28%
New Power is no stranger to our strategy spotlight updates over the course of the last seven years. Regular readers now that New Power is our high growth, Impact Investing portfolio meaning we limit the underlying investments to those sectors and stocks that are making change for good. These companies often challenge incumbent players in their own industries. All the investments in the New Power Fund are driving the needle toward positive environmental, social and economic change while avoiding those with negative external costs to society. That is Impact Investing! Please take a moment to read all about the ideology behind impact investing at established goals for New Power.
https://allseasonfunds.com/impact-investing/
Obvious examples are renewable energy, electric vehicles, battery technologies, 5G infrastructure, Clean Air and Water, Methane recapture, on-line Real estate companies, automation, digital currencies and payment systems, 3-D Printing, and Internet of Things (IOT).
2020 has been an incredible year of opportunity for investment programs that have the freedom to follow new leadership in stocks and take advantage of the explosive trends occurring in nearly every sector. Renewable energy investments have been the most surprising to us. Who would have guessed that solar stocks would average almost 50%/ year since the election of Donald Trump, despite newly imposed solar tariffs and despite the ever-lower price of competing fossil fuel generated electricity? Renewable energy and the electrification of transportation represent a solid 40% of total assets in New Power. Also, surprisingly, we don’t own a single share of Tesla, but we do own all the battery, lithium and automated driving technologies behind electric vehicles- at much more reasonable valuations.
Other winners in New Power include digital payment systems, cyber security, block chain technologies, genomics, five G technologies and even a little Bitcoin. We have had a few frustrations as well including repeat and failing efforts to invest in on-line learning and organic foods. We thought both would be slam dunks during COVID but haven’t found either sector to be very productive. We will keep them on the radar for another time. Our only position currently held at a mild loss is Beyond Meat (BYND) which we admittedly bought late. We are holding Beyond Meat and remain shamelessly bullish on the name. We will probably increase our position size before long.
There are still plenty of high growth opportunities as we look ahead into 2021, despite our wildly overvalued broad market condition today. New on our watch list but not yet full engaged are some of the new players in Hydrogen based fuels and associated technologies, especially for larger trucks and commercial fleets. We would also love to get exposure to the incredible growth in charging stations but most of those companies remain private to date. Also, on our radar are continuing investments in the shared economy sectors as we eagerly await the IPO of Air Bnb. The timing could not be better as a post Covid trade.
The point of all this detail is to give you an idea of the types of companies, breadth of scope and general orientation of the New Power Fund investment strategy. This strategy is not for the investor who is intolerant of 15-20% declines at least annually. This IS a program for any investor who want to allocate their investment capital to next generation of high growth companies who are making the world a better place, environmentally, socially and economically speaking. Our firm remains focused and committed to risk management for our clients. But risk management is a dial, not a switch. The New Power Fund is still risk managed but individual investments are clearly more speculative and high growth in nature. If you would like to have a conversation about potential exposure to this strategy, we are happy to have that conversation.
Please stay tuned next week in our next Strategy Spotlight as we review our newest strategy, Multi – Asset Income (aka MASS Income). As we investigate 2021, we see a landscape of inflation, tougher broad stock market conditions and a clear shortage of real income options for investors. MASS Income is designed exactly for that environment and could be one of our best performers.
Happy Holidays to everyone,
Sam Jones
President, All Season Financial Advisors
