AuAg Precious Green celebrates three years on a high note
The fund AuAg Precious Green was launched at the end of August 2020 with the promise of offering an investment product that combines investments in green technology companies and investments in gold.
A modern 60/40 portfolio
The idea was to create a product that would be a better alternative to a so-called 60/40 portfolio - that is, a portfolio that balances risk between stocks and interest rates. With three years of history, the fund's manager, Eric Strand, states that AuAg Precious Green has delivered on its promises, while at the same time, he believes that the future of the fund looks bright.
“AuAg Precious Green has performed well in an environment of rising interest rates and challenging equity markets - an environment that has been unusually difficult to navigate for the traditional 60/40 portfolio. Just as we predicted when we launched the fund, gold has been a better option than bonds to balance the risk in equities," says Eric Strand.
AuAg Precious Green invests at least 50 percent of the managed capital in the stock market, focusing on green technology companies. More precisely, the fund invests in four sub-areas: production of environmentally friendly energy, reduced emissions and recycling, energy storage and extraction of elements needed for green technology. The remainder is invested in precious metals, primarily gold, which is considered a safe haven in times of unrest on financial markets and thus benefits when stocks fall.
Since its inception (September 2023), the fund has generated a return of 57 percent after fees (as of August 2023), which is significantly better than what a portfolio allocated to global stocks combined with fixed-income investments did. In particular, AuAg Precious Green performed strongly in 2022, which was a historically bad year for many asset classes, including traditionally defensive fixed-income investments.
“2022 was remarkable in many ways, but the combination of a weak stock market and sharply rising interest rates in the wake of central bank action was a toxic cocktail. In this environment, AuAg Precious Green performed well. The fund benefited from its exposure to gold and the fact that companies focusing on green technology managed to avoid large parts of the broad decline in the stock market," explains Eric Strand.
"In my world, gold should be included in all strategic investments.”
Eric believes that green technology will continue to be a strong theme going forward. This is a result of the green transition that is taking place in virtually all industries.
"Green technology is not a buzzword but a reality for future industries. It has been especially accentuated in recent times when major political reforms have been carried out to speed up the transition and ensure access to green energy on a national level. Green technology will be a central part of future industrial revolutions and benefit the companies in the sectors where AuAg Precious Green has its largest exposures," says Eric Strand.
Regarding the price of gold, Eric remains positive in the long term and believes that the precious metal will benefit from the significant challenges the world's central banks face.
"In my world, gold should be included in all strategic investments. Not only as a hedge against stocks and as an inflation hedge but also as an asset with great return potential.”
“Central banks have stimulated the economy at the slightest sign of weakness, leading to monetary inflation. It will likely happen again, as no politician wants to go through a serious recession. In other words, there are clear incentives for monetary inflation, favouring the price of gold and other investments linked to gold.”
"I see a fund like AuAg Precious Green, which combines exposure to the green technologies of the future with holdings in gold, as an exciting option for all long-term investors. The interest for the fund is also at unprecedented levels," concludes Eric Strand.