Outperforming fund manager shares tips on investing sustainably — and generating big returns
Philip Ripman manages the $1 billion Storebrand Global Solutions fund, with a focus on sustainability. But some of the stocks in his portfolio might surprise you. As well as green energy stocks, Ripman also invests in chipmakers, cybersecurity stocks, pharmaceuticals and more. The fund’s principle is to avoid companies that make over 5% of their revenues from fossil fuels, tobacco, alcohol, war and other vice-related activities, instead investing across the themes of smart cities, circular economy, equal opportunities and renewable energy. The strategy appears to have paid off over the long term: it ranks top for 10-year annualized returns (15%) on Morningstar’s list of global mega-cap equity funds. Ripman shared three tips for investing sustainably on CNBC Pro Talks , including how to play the renewables theme. Renewables are ‘cheaper’ right now Ripman said that renewable energy stocks look relatively cheap and offer “a lot of opportunity” right now. “I think the renewable side, like I mentioned, for once is actually becoming a cheaper prospect,” Ripman said last week, adding that it was overvalued in 2020. After some volatility in subsequent years, Ripman said valuations were “now back down to a level that makes them really interesting prospect.” “These are areas that are going to see capital inflows, because of the fact that country level, city level, state level, have all committed to make sure that we do have more renewable energy available than previously,” he added. “So it’s an area that has to grow if we’re going to succeed with all the various goals that we’ve been set at various levels.” Look across the supply chain Investors should think more broadly than just pure plays, according to Ripman. “We like to look at it as various parts of the value chain,” he said, including different technologies that play into a theme. “We’d look at the entire value chain — some parts of it might be overvalued, other parts of it might not have as much publicity as others, and also not necessarily be as a known commodity within the sustainable investing sphere, which means it might not come with an ESG premium tag that we do see some companies exhibit within that area,” Ripman said. Examples of this from his fund include U.S. firms Solaredge a nd Enphase Energy , which make solar micro-inverters and energy storage, as well as South Korean company Samsung SDI, which manufactures batteries. Consider what’s needed in the future The four themes in Ripman’s fund — smart cities, circular economy, equal opportunities, and renewable energy — are what he believes will be “essential in years to come.” “And I think that’s one of the core concepts. When we talk about sustainability as an angle for investing, it’s really boiling it down to: what do we need more of in the future,” he added. Playing into these themes, the top holdings in his fund comprise include chipmaker Nvidia , cybersecurity firms Palo Alto and Crowdstrike , and consumer goods giant Unilever . Under smart cities, his holdings include Schneider Electric , electric vehicle maker BYD, and water technology firm Xylem . There’s also more room for growth in sustainable investments, Ripman said. “We think about climate change as an issue where there’s a lot of capital already committed, there’s a lot of regulation in place that will support more spending in this issue that I think will be quite sticky. I think these are areas that we need to stay invested in over time,” Ripman told CNBC Pro Talks.
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