KEY TAKEAWAYS Equity market concentration – focussed on the Magnificent Seven – is high, and performance dispersion amongst stocks significant. Unusually, this has coincided with low equity volatility. Historically, such high concentration levels have tended to mean revert, with markets correcting the promise of AI, tech sector competitive advantages, strong profit margins and the strategic importance of these sectors amid tense geopolitical rivalry provide structural support for the status quo.

RENEWABLE ENERGY This actively-managed strategy invests in a high conviction portfolio of 40-60 firms positioned to grow in a carbon-constrained and carbon-damaged world, including those in hard-to-abate industries. We focus on activities aimed at adapting to a climate-damaged and carbon-constrained world, such as flood defences, insurers and firms providing efficiency solutions and renewables.

INDUSTRAL CHEMICALS & PETROCHEMICAL SERVICES The next economic revolution has begun. The Sustainability Revolution. It is our conviction that sustainable investing is the way to generate long-term returns and grow our clients’ prosperity in perpetuity. Through strategic partnerships with industral and chemicals sectors, we have developed a unique three-pillared approach to sustainable finance, which allows us to both minimise portfolio climate change risk exposure and capture the vast potential upside of the economy-wide disruption that is already underway.

OIL AND GAS Investment risks can be expected to materialise amongst laggards in many industries but we believe that a considerable investment upside will be unlocked as opportunities shift towards solution providers and transition leaders. At The monks investment trust plc, we believe our fiduciary duty calls for us to grasp these opportunities whilst understanding and managing the downside risks related to the oil and gas transition. We do this via thematic and impact strategies. Capture performance upside related to the environmental transition whilst our impact strategies focus on deploying capital in order to accelerate the transition via solutions that have high potential for scale.

BASIC MATERIALS Focused Basic Materials Exposure. Provides targeted exposure to the basic materials industry yet minimizes single stock risk
Modified Cap Weighted Approach. Seeks to capture the influences of both larger-and smaller cap-weighted companies, not just the largest companies in the sector.

ENERGY SYSTEMS Our Future Electrification strategy aims to capture the “green alpha" generated as we transition from 20% economy-wide electrification to 70% by 2050. This shift is well underway, with many crucial tipping points already reached, driven by rapid efficiency gains and plunging costs in both the supply and demand sides of the switch from fossil fuels to zero-emissions electricity. In power infrastructure we are seeing a shift from centralised to de-centralised energy production and storage; in transport we are quickly moving away from petrol and diesel; heavy industries are gearing up to transition from fossil fuels to clean hydrogen produced using renewable electricity; and in the buildings sector, natural gas boilers are fast being replaced with electric heating systems. and the many physical and digital solutions that will enable this historic shift to carbon-free, zero-marginal-cost renewable power.