April was one of the worst months in years for major indices. The NASDAQ fell 13.3% in April, its worst monthly performance since the financial crisis in October 2008,[1] The S&P 500 sank 8.8% for its biggest monthly drop since the onset of the pandemic roiled markets back in March 2020. [2]
The dominating narrative over the month was incredible bearish sentiment, as the AAII survey produced one of its most bearish readings in decades.[3] Primary sources of the pessimism include the fear of a recession and continued supply chain constraints through the Russo-Ukraine War and COVID-19 shutting down entire cities in China, ultimately driving inflation higher. [4]
It all comes down to expectations. A lot of macro-economic conditions become self-fulfilling expectations when it comes to prices and inflation. These expectations have now shifted to “higher for longer” for inflation which should force the Fed’s hand into a rate-rising cycle over the coming months, which would be prohibitive to overall equities, but particularly painful for growth equities specifically. [5]
On top of this, the most recent U.S. GDP numbers have come in and have shrunk for the first time since the pandemic, contracting 1.4% in the first quarter vs. consensus of +1.1% and +6.9% in Q4.[6] The surprise was exacerbated by a widening trade deficit reflecting supply chain problems, as well as lower private inventory investment and fading government stimulus spending.
High growth and momentum names continued to be an area that investors are using as a source of funds as broad-based multiple compression continues.
Please note that all performance figures are showing net
data. Past performance is not an indicator for future results and should not be
the sole factor of consideration when selecting a product.
Macro Outlook
The world is now realizing just how fragile the energy system is. Europe’s over-reliance on Russia’s Crude products has led to significant geopolitical risk.[7] The reality of this conflict is that it will impact traditional and renewable energy globally, which will trickle down to our fund. In our eyes, the crisis could be the single most significant catalyst to happen for energy decarbonization and the renewable energy space in recent years,[8] more so than any tax credit extensions, Paris climate agreement targets, infrastructure bills, or the Build Back Better plan.
There are significant similarities between what’s happening now versus the OPEC crisis in the 1970s that took oil from $20 to $110 a barrel inflation-adjusted and led to a wave of renewable energy investments and environmentally friendly legislation. [9]
Significant contributing factors that led to where we are today come down to a miscalculated shift towards denuclearization in Europe, starting in 2010, and the decarbonization of the energy supply that substantially outpaced the decarbonization of energy demand.[10] The world has gotten a harsh reminder that being dependent on bad players to provide core energy needs has devastating consequences and that being able to generate renewable energy from your own backyard is the ultimate long-term solution. As Europe tries to decouple its energy sourcing from Russia, it will turn to producers of cleaner, more secure energy elsewhere in the world.
We have underinvested in energy capacity buildout and are now paying the price. We believe this should be even further motivation to increase other sources of energy, particularly renewables, in order to 1) lower Russian crude energy dependence; 2) finally build the renewable capacity we need to accelerate the transition. [11]
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1M
|
3M
|
6M
|
YTD
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12M
|
SI
|
|
HANetf S&P Global Clean Energy Select HANzero™ UCITS ETF
|
-14.94%
|
0.12%
|
-32.10%
|
-14.16%
|
NA
|
-28.51%
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|
S&P Global Clean Energy Select
|
-14.91%
|
0.25%
|
-32.00%
|
-14.00%
|
-24.84%
|
-28.28%
|
Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 30/04/2022. Please note that all performance figures show net data.
Learn more about our Clean Energy ETF