Monthly commentary - Mackenzie Greenchip Team

Portfolio Manager Monthly Insights

Key takeaways

Environmental indexes and the Greenchip strategy both outperformed in the month.  

The Greenchip strategy benefited from strong performance among European utilities such as Enel and EDP and from double-digit gains in copper miners First Quantum, Hudbay, and Capstone.

Macroeconomic recap

Global asset markets turned in another month of broad-based gains in September, led once again by US technology stocks. The pace of announcements regarding ever-larger data centre investments continued to accelerate, and so too did the increasingly circular partnerships and funding arrangements between major players such as Nvidia, OpenAI, Oracle and others. Oracle’s deal to provide $300 billion of cloud services to OpenAI, which currently has less than $20 billion in revenue, was enough for the company to add more than $250 billion to its market value and make founder Larry Ellison the richest man in the world. Meanwhile, in the face of this accelerating euphoria, the US Federal Reserve saw fit to add fuel to the fire by cutting interest rates. As the AI boom and easy money combined to increase demand for commodities, copper and aluminum rose approximately 5% each and precious metals more than 10%, with gold making a record high. Commodities with broader applications such as oil and steel, however, were much more muted as trade and general economic activity remained sluggish in the face of tariffs and wars.

Current positioning and Outlook

Environmental indexes and the Greenchip strategy both outperformed in the month. The FTSE Environmental Opportunities index on which we report was led by Tesla and Taiwan Semi, both of which are catching some of the AI fever as Taiwan Semi manufactures most of Nvidia’s chips and Tesla is generously assumed to be a leader in humanoid robots and other futuristic markets. In what seemed almost timed to help Elon Musk retake the world’s richest man crown, Tesla announced a new pay package for Musk that could reach a figure of $1 trillion if the company reaches a market value of $8.5 trillion; hardly a sign of depressed ‘animal spirits’ that need a boost from lower rates. The Greenchip strategy benefited from strong performance among European utilities such as Enel and EDP and from double-digit gains in copper miners First Quantum, Hudbay, and Capstone. The outlook for that commodity, so critical to electrification and the energy transition, tightened further after US giant Freeport McMoRan announced a force majeure landslide event at its Indonesian mine, one of the largest in the world, and a suspension of production there until at least the end of 2026.

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