Schroder Global Alternative Energy Fund Z Acc GBP

Asset Manager Overview

Schroders is a large global investment management firm that has a heritage which dates back over 200 years. Today it is responsible for around £740 billion of assets (as of end of December 2022), has offices worldwide and manages funds across all asset classes. 

Fund Manager/Team Overview

Mark Lacey, Alex Monk and Felix Odey are the three named managers on the strategy. However in practise Alex Monk has most involvement with the fund followed by Mark Lacey as head of the team. The team also run the Schroder Sustainable Food and Water and the Schroder Global Energy funds, with Felix Odey's key focus the former and Mark Lacey's the latter. Mark Lacey joined Schroders in 2013 and heads the firm's Global Resource Equities team. The team are supported by a dedicated analyst in Mannat Chopra and additionally benefit from the firm's global and regional teams of analysts, as well as the group's Sustainable Investments team. 

Investment Philosophy & Process Overview

The team believe that the global energy system will continue to drastically reposition in the coming years towards more renewable sources with clear targets and governmental policy support increasingly in place. The aim of the team is to identify the most attractive companies involved in the clean energy space. 

The invesment process begins with a range of screens looking across financial and environmental characteristics. The universe is broken down to sub industries with company activities and revenue exposures screened to identify the ones that generate more than 50% of revenues from businesses contributing to the energy transition, as well as those that have strong market share and attractive financial characteristics. This narrows the list to circa 270 companies. The team then do a deep dive into the stocks, which includes traditional fundamental company analysis, building financial models and undertaking stock valuation work. At the industry level, they are looking for sectors with a strong and sustainable tailwind behind them, i.e. where demand is robust and growing and high barriers to entry exist. They also consider the geopolitical scenery, with respect to regulatory developments and different dynamics in individual countries, as these play a crucial role in driving the development of the energy infrastructure and end markets in these countries. With regard to company characteristics, the team are seeking those that have the potential to generate high or improving returns on invested capital alongside healthy free cash flow generation. They will analyse the sustainability of a company's business model believing that those with more sustainable business practices are most likely to deliver earnings and cash flow growth over the long term. As clean energy is a changing industry, with a lot of capital intensity, they are also looking for cash flow inflection points. A final sense check is done on a company's balance sheet strength given these firms are often in the early stages of their development and are subject to new industry risks. The team can also invest in a small number of companies with less than 50% of current revenues tied to the energy transition, however these can not make up more than 25% of the portfolio in aggregate and are deemed as being en route to meeting the revenue target in the coming years. 

The resultant portfolio will typically have 30 to 60 stocks chosen from across the market cap spectrum, with approximately 80% of the portfolio and investable universe currently in firms with a market cap below EUR 10 billion. Position sizing is driven by the manager's conviction in the company and view of a company's risks (e.g., its market liquidity, balance sheet strength and performance beta), with initial positions ranging from 2% to 5% for large and medium-sized companies and around 1% for smaller companies. A maximum stock position is 10% and the manager will follow the industry 5/10/40 UCITS concentration rule.

ESG Integration

Asset Manager ESG Integration

Schroders have been a signatory to the UN Principles for Responsible Investment (PRI) since 2011. At its most recent assessment it scored 4 out of 5 for Investment & Stewardship policy. Additionally, Schroders is a signatory to the UK Stewardship Code, the UN Global Compact principles, has joined the Net Zero Asset Managers Initiative and has its greenhouse emission reduction goals formally validated by the Science Based Targets Initiative (SBTi).

Responsible investment has become increasingly more relevant to the decision-making process of the firm's investment team of portfolio managers; Schroders firmly believes that ESG factors, in addition to traditional financial analysis, can have a material impact on a company's fair value and its ability to deliver sustainable performance.

Schroders has an impressive range of proprietary tools, such as CONTEXT, to analyse the sustainability of a company's business model using a selection of metrics from conventional and unconventional data sources, SustainEx, which assigns an economic value on the impact that entities have on society and ThemEx, which measures companies' contribution to the UN Social Development Goals. The Sustainable Investment team is well resourced, comprised of over 50 dedicated ESG professionals, and organised into different teams, which deal with data governance and analytics, models and tools, research, accreditation of ESG integration, engagement, voting, client communication and product support.
 
Schroders is an active steward of client assets and has developed a set of priority engagement themes which they believe are material to the long-term value of investments. Through an internally developed engagement and voting database, the firm's various teams of portfolio managers and analysts can review the objectives and topics relevant for each sector, with that information serving as a base for the voting activity undertaken by the teams.

Fund ESG Integration

The manager and his team integrate ESG analysis in their research work. They screen the investable universe excluding certain companies that do not fit their criteria, carrying out fundamental analysis on those candidates involved in the clean energy space that they believe can contribute via their products and services to the global efforts to reduce CO2 emissions. As part of their work, the team will undertake a proprietary sustainability assessment where they will analyse and rank the companies based on 6 ESG and stakeholder management categories (corporate governance, customer management, environmental management, employee management, supply chain management and regulatory management) and 2 financial durability categories (management quality and balance sheet sustainability). Companies will be classified into 3 groups (lagging, neutral and best in class) and the emphasis is on investing in the best in class companies. Engagement and reporting on their companies' ESG efforts are key parts of the process. 

Responsible Investing Approach

This fund has a range of exclusions across fossil fuels, nuclear power, weapons, tobacco and alcohol; companies involved in these activities are screened out from the investable universe.

The mandate itself focuses on identifying companies that are involved/driving the energy transition to lower carbon sources of energy.  Hence the manager and his team are searching for companies involved in renewable energy equipment and generation, transmission and distribution, batteries and energy storage, electrical equipment and energy efficiency, clean mobility and hydrogen power. 

Environmental, social and governance analysis is a natural part of the fund's investment process, as they look for those companies that can contribute via their products and services to the global efforts to reduce CO2 emissions and seek to invest in best-in-class companies when assessed across their stakeholders (customers, environment, employee, supply chain, regulators).

The team engage with companies on a regular basis and provide non-financial impact reporting for the Luxembourg domiciled fund (Schroder ISF Global Energy Transition), which has been nominated as an Article 9 fund under the EU's SFDR programme. The Luxembourg domiciled fund is managed along identical lines to this fund. The reporting uses the firm's proprietary impact tool, SustainEx, which is based on the firm's own methodology for quantifying the various positive and negative externalities of companies. It is expected that this fund, in time, will have similar reporting to its Luxembourg domiciled equivalent. 

Risk Summary

This fund will look very different from broader global equity indices, due to the very deliberate focus on solely investing in businesses involved in the clean energy transition. Investors should therefore expect the fund to act very differently (at times) versus broader equity indices.

Due to the manager's unconstrained approach and wider opportunity set, the fund can also look and perform very differently to its alternative energy index, however we would expect the alternative energy index to be a closer comparator for the fund over time than a broader global equity index.

We expect stock selection to be a key contributor to the fund's performance over the long term, however sector and country allocations (which are driven by the stock opportunity set) will also influence performance at times.

The fund will likely be invested in companies across the market capitalisation spectrum and the manager frequently sees attractive opportunities in small and medium sized companies, this is likely to exacerbate volatility in the fund for good or ill. Additionally the wider strategy has grown at a fast rate since launch. If flows continue unabated, this may, in time, pose portfolio construction and liquidity challenges within the fund.

​The mandate allows the manager to build cash up to 10% of the portfolio as well as to hedge currency risk within the fund (when the positioning in certain countries is significantly over/underweight compared to the index). As such, these positions can also work for or against the manager.

Additional Information

(3 years data to last month end unless otherwise stated)

Qualitative Risk Assessment

	Significant	Potentially Significant	Not Significant
Equity Risk
Interest Rate Risk
Credit Risk
Exchange Rate Risk
Liquidity Risk
Emerging Markets Risk
Derivative Risk
Manager Risk
Gearing Risk
Discount/Premium Risk

For the full summary of the risks, click here

3 Year Rolling Sector Outperformance

Source: Square Mile and LSEG Lipper (all rights reserved), Data as at: 12th March 2026. Share price total return.

Maximum Drawdown (Rolling 12 Months)

Source: Square Mile and LSEG Lipper (all rights reserved), Data as at: 12th March 2026

Calendar Year Performance To Quarter End

Source: Square Mile and LSEG Lipper (all rights reserved), Data as at: 30th March 2026

Value for Money

The fund's total cost of investment is higher than its peer group funds, but we believe this represents reasonable value for money given the manager's dual focus on financial returns and a structural reduction in CO2 emissions.

​In line with the MiFID II regulations, asset management firms are required to disclose all of the costs and charges related to the running and administration of their funds, including items outside of the OCF, such as research costs. As a result, Schroders has absorbed the costs associated with its research, which slightly reduces the overall fee paid by investors.

Source: Square Mile and LSEG Lipper (all rights reserved), Data as at: 31st January 2026.

Square Mile Analysts

Jake Moeller - Associate Director - Responsible Investment

Guilherme Pampolin - Investment Research Analyst

Rating Changes

The Square Mile ratings are reviewed every 6 months. For full details on the methodologies, click here.
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