Munro Climate Change Leaders Fund on RWE AG
Thesis
RWE is a German utility positioned to benefit from the modernisation and interconnection of European electricity networks. The company upgraded earnings during the quarter and increased its stake in grid operator Amprion. Munro believes grids need expansion to strengthen Europe’s energy resilience and manage the increasing complexity created by renewable generation. This provides a medium- to long-term electrification growth driver beyond near-term utility share-price volatility.
“European electrical grids are attractive due to increased need for grid interconnection to improve European energy resilience”
Key risks
- Higher bond yields compressing utility valuation multiples
- Election-driven policy uncertainty over decarbonisation and infrastructure
- Political and investment uncertainty around the timing of grid development