Monthly report – March 2025

Monthly fund update

Key points

• T8 Energy Vision ended March down 2.5% (in Australian dollars, hedged to the Australian dollar), outperforming its benchmark down 4.7% and global equities down 5.0%. In unhedged US dollar terms, this equates to down 1.9%.

• Global equities continued their decline on increasing worries about the health of the US economy and concerns about a potential global trade conflict.
• Looking beyond the short term noise, in our view, booming electricity demand represents a compelling opportunity for investors in equities. Driven by data centres (a secular growth trend) and the electrification of road transport (a structural shift), the winners will include energy generation, grid infrastructure, energy storage and electrification (as well as their direct supply chains, including critical minerals).
• Falling US interest rates (100 basis points of cuts so far in this easing cycle and the market is pricing in three cuts during 2025, as of the end of March) are yet to have a material impact on the electric energy sector and its supply chains (which have displayed very high sensitivity to interest rates, historically). We believe that this dislocation is explained by recent policy uncertainty (especially up to and following the US election) which has polarised expectations in terms of the outlook for different forms of energy generation and temporarily obscured the impact of this positive cyclical catalyst.
• Tariffs and trade wars do not change our positive outlook for energy stocks driven by structural, secular and cyclical tailwinds all converging. We believe this period of market weakness represents a good entry point..