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Energy is the most pressing issue of our time

Why invest in clean energy?

Disruption creates opportunity

  • Changes to 100-year norms in energy are underway
  • The combustion age is ending – the electric age has begun
  • Large-scale disruption represents an opportunity for significant investment returns

The problem and the solution

Today: The Combustion Age

  • Over 80% of energy from fossil fuels
  • Over 50% of primary energy lost in the process of combustion
  • Only one-third produces useful work or heat
  • Energy is three-quarters of global GHG emissions

Tomorrow: The Electric Age

  • Greater efficiency means only half as much primary energy required
  • The world needs 2.5x as much electricity and 250x as much energy storage
  • 20% less mineral extraction
  • More abundant, more secure energy at lower cost

 

What are the fundamentals?

Generational investment opportunities from extraordinary disruption

  • Governments, corporates and consumers are all driving change
  • Trillions of dollars of investment
  • Mass adoption of new technologies
  • Extraordinary industry growth rates
Growth by 2030 2050
Renewables 3-4x 7-8x
Electric vehicles 5-6x 8-10x
Batteries 15x 250x

 

Our energy vision

Invest in an extraordinary but inevitable change

  • More abundant, more secure energy at lower cost, will usher in a new era of prosperity and value creation
  • 3/4 of global GHG emissions come from energy – mass-adoption of new energy technology is changing the unsustainable 100-year norms
  • Extraordinary commitments from governments, corporates and communities to change, directing trillions of dollars of investment
  • Secular trend established with high growth rates in key industries (renewables, energy storage and electrification)
  • Opportunity to generate extraordinary investment returns and to support this vital but inevitable change

 

How do you invest in clean energy?

The addressable opportunity is in publicly-listed companies

Key industries

  • Renewable energy (e.g. solar, wind – generation of zero-emission electricity and heat)
  • Energy storage (batteries and hydrogen)
  • Electrification (e.g. electric vehicles, heat pumps – devices and equipment which consume electricity rather than hydrocarbons)

Invest in a portfolio of companies

Active research and management are the critical ingredients

Key attributes

  • World leaders in key industry segments (via innovation and market share)
  • Attractive fundamentals (high growth, high margins, low capital intensity)
  • Staying power (strong, net cash balance sheets)
  • Competitive advantage (through technology, scale, or both)

 

Investment strategy

Specialised strategy for successful investment in clean energy

  • Actively managed global equities with a ‘growth’ style bias
  • High-conviction portfolio (30-40 positions), fully invested (<5% cash)

  • Highly-liquid exposures (no unlisted or illiquid positions)

  • Bottom-up fundamental valuations and institutional approach to portfolio construction and risk management
  • Oversight and deep industry insights from globally recognised advisory board

Target returns and expected risk

Attractive, risk-balanced returns

  • Target returns greater than 20%pa over a 3-5 year investment horizon
  • Volatility 15-25% (in Australian dollars)
  • Beta (to global equities) 0.8-1.5
  • Correlation (to global equities) 0.6-0.9 (r2)

Track record and risk metrics

Cumulative return since inception (A$, net of fees)

31 July 2019
30 September 2024

 

Past performance is not an indication of future performance.

1 The Clean Energy Index comprises equal weightings to the S&P Global Clean Energy and Wilderhill Clean Energy Net Total Return Indices
2 MSCI World Net Total Return Index

Performance and Risk (A$, as of 30 September 2024)
T8 Energy Vision Clean Energy Index1 Global Equities2
Returns
3 months 3.7% 1.5% 2.8%
6 months -6.4% -8.3% 3.3%
12 months -19.3% -23.1% 24.0%
Year to date -14.6% -19.8% 17.6%
Since inception 48.6% 13.5% 93.8%
Risk (last 12 months)
Volatility 26% 27% 9%
Sharpe ratio -0.8 -0.9 2.6
Equity Correlation 0.7 0.7 1.0
Equity Beta 1.0 1.1 1.0
Up-capture 77% 81% 100%
Down-capture 111% 121% 100%
Up/Down Capture Ratio 0.7 0.7 1.0

 

Important notice

© Copyright 2021 Triple Eight Capital Pty Ltd (ABN 52 642 108 496, AFSL 527866). All rights reserved.

Equity Trustees Limited (“Equity Trustees”) (ABN 46 004 031 298, AFSL 240975) is the Responsible Entity for T8 Energy Vision. Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT).
This document has been prepared by Triple Eight Capital Pty Ltd (“T8”) to provide general information only. The information contained herein does not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither T8, Equity Trustees nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance.

You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product. A Target Market Determination describes who this financial product is likely to be appropriate for (i.e. the target market), and any conditions around how the product can be distributed to investors. It also describes the events or circumstances where the Target Market Determination for this financial product may need to be reviewed. The Product Disclosure Statement and Target Market Determination for T8 Energy Vision is available at https://t8cap.com/how-to-invest/.

Risk warning: T8 Energy Vision will not necessarily be invested in all of the areas mentioned in this material at any given time. New technologies not listed in this material may emerge which may benefit from the changing dynamics of energy markets. It is therefore not possible to exhaustively list all areas in which T8 Energy Vision may invest. By investing in companies involved in manufacturing or resource extraction, T8 Energy Vision will not by its nature be a low carbon emissions portfolio relative to the broader listed global equity market and may have investments in companies that currently have material exposure to fossil fuels (e.g. an electric utility which produces the majority of its electricity from sources with no greenhouse gas emissions may operate or have exposure to gas-fired electricity generation assets within its portfolio).

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Why invest in gold?

Gold is an essential asset class and its production is associated with considerable socio-economic contribution

  • Gold bullion has been the best performing asset class of the last 20-years (an achievement we expect it to repeat over the next 10 to 20-years)
  • Gold is the only truly ‘precious metal’ (despite silver and the platinum group of metals all being considered ‘precious metals’). The absence of industrial uses is gold’s key differentiator (industrial applications accounts for c.67% and c.65% of platinum and silver demand respectively, relative to gold at less than 10%)
  • This makes gold bullion a currency which is held and traded (rather than a metal which is used or consumed)

 

Why invest in gold? (continued)

Gold is an essential asset class and its production is associated with considerable socio-economic contribution

  • Gold bullion is the only asset with genuine intrinsic value (i.e. its value is not predicated on future cashflows or commitment and is materially supported by its replacement cost which increases structurally over time and with inflation) and comparable liquidity to cash, even in times of crisis
  • Gold is also geopolitically neutral
  • These characteristics make it a ‘store of value’ and see it playing the role of ballast in our financial system
  • The larger the financial system grows, the more ballast is required

 

What are the fundamentals?

Robust demand from multiple sources combined with increasing supply constraints

  • Inflation remaining persistent is likely to be a major upward catalyst for gold (inflation remaining persistent would be only the third time this has happened in the last 50 years – the prior two occasions saw triple-digit percentage returns)
  • The two prior occasions saw gold rise by 320% (1972-74) and 160% (1979-80) and we see no reason to believe this time will be different
  • Gold allocation should be considered for all portfolios to hedge the risk that elevated inflation remains persistent

 

Why do we need to mine more gold?

The gold industry’s socio-economic contribution is unrivalled

  • The new mines are increasingly situated in the less developed world
  • The typical challenges in these regions are: low life expectancy, limited education opportunities, poor employment prospects
  • Mining companies build infrastructure which begins to address these issues
  • Responsible gold producers support sustainable socio-economic development (through contribution to jobs, tax revenue and investment in local communities)

 

Why invest in gold producers?

Gold producers are naturally levered to the gold price

  • Gold producers provide leveraged exposure to gold bullion (target beta to gold bullion of 1.5-2.5) via producer operating margin and reserve ounces (i.e. if the gold bullion price moves by one unit, a basket of gold producers would be expected to move by two units)
  • Investing in responsible gold producers has the potential to generate investment returns and support support sustainable socio-economic development
  • We consider responsible gold producers to be those which conduct their gold mining operations with good governance as well as respect for the environment, human rights and the wellbeing of associated communities, employees and contractors

 

Our vision

Positive socio-economic outcomes can be achieved without sacrificing investment returns

  • Gold’s unique and attractive fundamentals make it a beneficial addition to any diversified investment portfolio
  • The naturally leveraged characteristic gold producers provide (relative to gold bullion) make it a superior choice in upward-trending markets
  • Investing in well-managed responsible gold producers supports sustainable socio-economic development while minimising detraction from environmental, social or governance factors
  • Exposure to gold producers with good governance as well as respect for the environment, human rights and the wellbeing of associated communities, employees and contractors does not detract from investment returns – responsible gold producers have an overall lower fundamental risk profile

 

How do you invest in gold producers?

The addressable opportunity is in publicly-listed companies

Focus on the key industry segments

  • Major producers
  • Royalties and streaming
  • Senior and emerging mid-caps
  • Critical by-products

 

Invest in a portfolio of companies

Active research and management are the critical ingredients

Focus on two key attributes

  • Attractive fundamentals (production growth, high margins, stable costs, low capital intensity)
  • Staying power (strong balance sheets)

 

Investment strategy

Specialised strategy for successful investment in gold producers

  • Actively managed, publicly-listed gold equities portfolio (15-20 positions), fully invested (<5% cash)
  • Highly-liquid exposures (no unlisted or illiquid positions)
  • Currency unhedged
  • Bottom-up fundamental valuations with institutional approach to portfolio construction and risk management
  • Oversight and deep industry insights from globally recognised advisory board

Target returns and expected risk

Attractive, risk-balanced returns

  • Target returns 20-30%pa over a 3-5 year investment horizon
  • Volatility 25-35% (annualised)
  • Beta (to gold bullion) 1.5-2.5
  • Correlation (to gold bullion) 0.6-0.9 (r2)

 

Track record and risk metrics

Cumulative return since inception (A$, net of fees)

31 July 2019
30 September 2024

 

Past performance is not an indication of future performance.

1 NYSE Arca Gold Miners Net Total Return Index (GDM Index)
2 Gold bullion as tracked by the SPDR Gold Shares (GLD US)

Performance and Risk (A$, as of 30 September 2024)
T8 Gold Gold Miners Index1 Gold bullion2
Returns
3 months 10.9% 12.4% 8.8%
6 months 20.2% 19.0% 11.3%
12 months 43.1% 39.5% 32.1%
Year to date 25.4% 25.7% 25.3%
Since inception 110.4% 61.1% 87.2%
Risk (last 12 months)
Volatility 28% 24% 14%
Sharpe ratio 1.5 1.6 2.3
Gold Correlation 0.6 0.6 1.0
Gold Beta 1.2 1.1 1.0
Up-capture 123% 107% 100%
Down-capture 116% 100% 100%
Up/Down Capture Ratio 1.1 2.2 1.0

 

Responsible gold production

References to responsible gold production refer to the term as defined by the World Gold Council, whereby responsible gold mining is conducted with good governance as well as respect for the environment, human rights and the wellbeing of employees, contractors and members of associated communities. These issues are addressed using the World Gold Council’s Responsible Gold Mining Principles which, together with the Mining Association of Canada’s Towards Sustainable Mining standard, set out frameworks and expectations as to what constitutes responsible gold mining. T8 has integrated these standards into its ESG assessment methodology. T8 believes that responsible gold production creates socio-economic benefits for host countries and associated local communities through job creation, tax revenue and community investment. Please email info@t8cap.com for more information.

 

Important notice

This material has been prepared by Triple Eight Capital Pty Ltd (“T8”) (ABN 52 642 108 496, AFSL 527866) to provide general information only. In preparing this material, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Neither T8 nor any of its related parties, their employees or directors, provide and warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Private Offering Memorandum before making a decision about whether to invest in this product.

This material is for distribution only to sophisticated investors, financial institutions, financial services licensees and their advisers. It is not for viewing by retail clients or members of the general public.

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