Monthly report – February 2025

Monthly fund update

Key points

• T8 Energy Vision ended February flat (in Australian dollars, hedged to the Australian dollar), outperforming its benchmark down 5.5%. In unhedged US dollar terms, this equates to down 1.1%, outperforming the fund’s benchmark (down 6.2%), US small caps (down 5.3%) and the S&P 500 (down 1.4%).

• Global equities declined and bonds rallied (risk-off) on falling consumer confidence and slowing consumer spending in the US (you will recall that consumer spending accounts for nearly 70% of US economic activity).

• T8 Energy Vision held its ground, outperforming US equities and its benchmark.

• In our view, the key issue (and opportunity) facing energy markets is the incredible demand for electricity in the US. For the first time in 20 years, the US is experiencing increasing demand for electricity. This is being driven by the boom in data centres, and hasn’t yet been fully appreciated by markets.

• Tariffs, trade wars and Chinese challengers to US technology supremacy do not change our positive outlook for this electricity demand growth.

• We are very constructive on the fundamentals of the electricity generation industry as well as transmission and distribution grid infrastructure and all of the associated supply chains (from critical minerals, to transformers and cables, to the latest nuclear reactor technology).

• Falling interest rates (100 basis points of cuts so far) are yet to have a material impact on our focus area of the electric energy sector and its supply chains (which have historically displayed very high sensitivity to interest rates). We believe that this lag is explained by the noise from President Trump in relation to energy and will prove temporary.