124: Fidelity's James Richards – Investing in Energy Transition Materials

In this episode, I'm speaking with James Richards, Co-portfolio Manager of Fidelity International's Transition Materials Strategy. James runs a strategy that invests in stocks of companies that are exposed to materials that will play a crucial role in the energy transition. And it's not all about copper or lithium. James keeps his investment universe wide and includes commodities, such as animal fats and wood chips. We discussed the spike in rare earth materials earlier this year. We also look at why this is a super-cycle, but unlike the previous, China-led one. And finally, we explore whether this strategy correlates with the Australian economy and its emphasis on materials and style factors, including value. Enjoy the show.

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Overview of podcast with James Richards, Fidelity

 

01:00 What are transition materials?

04:00 This was an analyst-driven idea, based on common themes emerging in different materials, rather than a product team idea

06:00 This is a different supercycle from the China-driven supercycle

07:00 There is a school of thought that says iron ore is benefiting from the transition. I don't really believe that

9:00 The energy transition will have an element of decommoditisation to it. There will be pockets of price premiums

11:00 Rare earth prices spiked earlier this year as generalist investors came into this market

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