Monthly commentary - Mackenzie Greenchip Team

February 28, 2025

Portfolio Manager Monthly Insights

Key takeaways

Environmental sectors performed largely in-line with global benchmarks while the Greenchip strategy outperformed.

Greenchip performance was supported by European holdings—notably strong reactions to earnings announcements from Siemens AG, electricity cable manufacturer Nexans, wind turbine producer Nordex, and mining equipment and services provider Sandvik—and by gains from several utility holdings.

Largest among these was a greater than 50% gain in Quebec-based Innergex, which agreed to be acquired by CDPQ. This helped raise the valuation of Canadian peer Northland, and we believe could be a sign of reassessment to come for other global developers of renewable electricity generation.

Macroeconomic recap

The wild start to 2025 continued as the constantly shifting policy announcements and geopolitical manoeuvring coming from Donald Trump’s second administration showed no signs of slowing down. Even as tariffs were invoked and withdrawn seemingly daily, arguably the biggest developments were in foreign policy. Trump has taken a decided turn towards a more open approach to Russia and a more adversarial approach with Ukraine in the ongoing conflict between those two countries where the US has to date been deeply involved with the Ukrainian side. While the situation—and so much else—is very much fluid and unpredictable, two conclusions may be drawn at this stage. First, that Trump’s seeking of resource deals from Ukraine, and even potentially from Russia, underscores how critically important scarce resources are globally even if financial markets have mostly refused to value them as such in recent decades. And second, that Europe was left adrift by the American shift and needs to drastically rethink its long-term security and economic strategies—and which allies are more or less likely to help accomplish them. Ironically, given the existential challenges crystallized for Europe, the region has begun 2025 in favour for asset performance, with equities outperforming those in the US by double digits—perhaps a testimonial to the vast gap in valuation and expectations that exists between the two.

Current positioning and Outlook

Environmental sectors performed largely in-line with global benchmarks while the Greenchip strategy outperformed. General environmental sectors were weighed down by Tesla’s loss of more than 25% as post-election enthusiasm for Musk’s political successes met with indications of rapidly dropping sales, especially in Europe. Greenchip performance was supported by European holdings—notably strong reactions to earnings announcements from Siemens AG, electricity cable manufacturer Nexans, wind turbine producer Nordex, and mining equipment and services provider Sandvik—and by gains from several utility holdings. Largest among these was a greater than 50% gain in Quebec-based Innergex, which agreed to be acquired by CDPQ. This helped raise the valuation of Canadian peer Northland, and we believe could be a sign of reassessment to come for other global developers of renewable electricity generation. Brazilian hydro and transmission giant, Eletrobras, also enjoyed solid gains as it announced an agreement with the federal government following long negotiations that settled questions—favourably, in our view—regarding voting interest, financial commitments to new nuclear development, and cash payments agreed post-privatization.

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