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12/2024

Individual Stocks or Funds: Which is the Better Investment Strategy?

In the world of financial investments, investors are often faced with the question of whether it is better to invest in individual shares or funds. Andres Gujan explains the role that factors such as diversification, risk/return ratio and personal preferences play in this decision.

Diversification and Risk: Individual shares are targeted investments in individual companies, which enables potentially higher returns. However, this is also associated with a higher risk, as the success of an individual share depends heavily on company-specific and market-related factors. Funds, on the other hand, spread the risk across a large number of shares or asset classes, which reduces the risk of loss. At Carnot Capital, we always keep an eye on these risk factors and periodically compare the portfolio with the ESG and impact values.

Risk-Return Profile: Individual shares can fluctuate strongly in the short term, but offer the opportunity for considerable gains in the long term. Funds offer a more stable performance over longer periods and are particularly suitable for investors who want to avoid large fluctuations in value.

Time and Costs: The selection and management of individual shares often required more time, knowledge and research. Professional fund managers, like us at Carnot Capital, deal with the portfolio on a daily basis, which reduces the effort for the investor.

Personal Preferences: The decision between individual shares and funds also depends on personal goals, risk tolerance and ethical considerations. Investors should design their investment strategy according to their individual situation and financial goals and draw on the expertise of specialised fund managers, especially for thematic investments.

“Overall, a balanced mix of individual shares and, for example, impact funds can be a sensible strategy to benefit from the advantages of both forms of investment, i.e. to achieve a good risk/return profile and make a sustainable contribution in the area of energy and resource efficiency. Andres Gujan, Founder Carnot Capital & Portfolio Manager

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Carnot Capital wins 1st place in the “Sustainable Performance Award® 2024”

Carnot Capital wins 1st place in the “Sustainable Performance Award® 2024”

Award for the “Carnot Efficient Energy Fund” Confirms Sustainable Investment Strategy

We are delighted to announce that the “Carnot Efficient Energy Fund” has secured 1st place in the prestigious “Sustainable Performance Award® 2024” in the “European Equities” category. This award recognizes the fund’s outstanding 5-year performance and its commitment to environmental sustainability, social responsibility, and sustainable investment strategies. The “Sustainable Performance Award®” is presented annually by the independent ProVita GmbH and published by the magazine Das Investment. The award honors equity funds that successfully combine ecological and social objectives with financial returns. The “Carnot Efficient Energy Fund” stood out among numerous competitors by demonstrating expertise in energy efficiency and CO₂ reduction while investing in top-quality companies.

Investing in the Future
The “Carnot Efficient Energy Fund” invests in companies developing innovative technologies and solutions to sustainably reduce global energy consumption and greenhouse gas emissions. The companies in the fund’s portfolio benefit not only from long-term growth opportunities but also actively contribute to achieving global climate goals.

“This award is a fantastic confirmation of our vision and investment strategy,” said Andres Gujan, Co-Founder and Portfolio Manager of Carnot Capital. “Our goal is to generate attractive returns for our investors while creating a positive impact on the environment and society. Winning the ‘Sustainable Performance Award® 2024’ shows we are on the right track.”

Sustainability Meets Performance
With a consistent focus on energy efficiency and sustainability, the “Carnot Efficient Energy Fund” has gained the trust of institutional and private investors alike in recent years. The clear impact requirements on one hand and the financial quality standards for portfolio companies on the other are the key factors behind the fund’s success and recognition within the industry.

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Nuclear Power – A New Boom or the Beginning of the End?

Nuclear Power – A New Boom or the Beginning of the End?

This was the title of a discussion programme on SRF television. The answer depends very much on your point of view. The expansion of nuclear power slowed down after the Chernobyl disaster (1986) and practically came to a standstill after Fukushima (2011), with Asia (China, India) being the exception. Since Europe has renounced Russian gas and wants to take the reduction of CO2 emissions seriously, nuclear energy is enjoying more support in Europe again.

The biggest advocates of nuclear power come from the IT industry: for Jensen Huang, CEO of Nvidia, nuclear power is virtually the natural energy source for operating the power-hungry data centres and Microsoft has already concluded a long-term supply contract with the damaged Three Mile Island nuclear power plant.

Some Key Aspects

In addition to high reliability and climate neutrality, nuclear power’s apologists cite the greater safety and lower radioactive waste of the new reactor designs. In addition, nuclear power plants reduce dependence on problematic exporters of fossil fuels. Essentially, however, proponents and opponents have been putting forward the same arguments for decades. Public opinion remains divided and varies from country to country.

The technology is indeed developing. However, the first SMRs – Small Modular Reactors – are unlikely to go into operation before 2030. The economic viability of new construction projects remains a major challenge, as the new plants in the UK and Finland have shown. While state support for solar and wind projects is declining, this is not (yet?) the case for new nuclear power plants.

Significance for Carnot Capital

The future of nuclear technology remains vague due to high costs and safety concerns, which is why we are not directly involved. In addition, sustainability is controversial. Over the last 20 years, the production of nuclear power has remained more or less stable globally. Due to the high growth in renewable and fossil electricity production, the proportion has halved to around 10%. In terms of value, investments in renewable energies are currently around ten times higher. We are therefore looking for investment opportunities in the management of electricity grids, where requirements have risen sharply. Schneider Electric, ABB and BKW fall into this category.

 

Did You Know?

The first British coal-fired power station was started up by Thomas Edison in 1882, and the last one went out of operation at the end of September.

 

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