Munro Partners

Nov 28, 2021

One fund manager thinks that there’s a very exciting sector. Tristan Harrison has been a contributor to The Motley Fool since October 2016. He has an advanced diploma from the Association of Accounting Technicians (UK) and is currently studying to be a Chartered Institute Management Accountant. Tristan's goal is to help Australians learn about the great businesses listed on the ASX that will help grow their portfolio, wealth and confidence about investments over the long term. He's a keen tennis fan and can't wait for the next Australian Open to roll around. You can view Tristan's holdings here . Latest posts by Tristan Harrison ( see all ) Image source: Getty Images There is one fund manager that believes there’s an investment opportunity with a sector out there which could be worth up to $50 trillion. Nick Griffin from Munro Partners was speaking to Patrick Poke from Livewire Markets when he said he thinks a particular part of the global economy could have an opportunity of between $30 trillion to $50 trillion. What’s the investment opportunity? Mr Griffin believes that global decarbonisation could have a total cost of between $30 trillion to $50 trillion. He points out that this cost is directly a $30 trillion to $50 trillion revenue opportunity for the companies that can provide these solutions. There are a number of areas that he believes could see significant growth in the coming years. He said on the Livewire podcast: As we see here today, electric cars are roughly 3-5% of all cars sold in the world today. Renewable energy is less than 20% of all electricity generation globally, and electricity is actually only 25% of the energy mix. So, if you truly want to de-carbonise the planet, IE, get to net zero by 2050 and that’s the goal, then electricity as just a share of our energy generation has to more than double, IE, oil has to be replaced with electricity, if that makes sense, to power all these electric cars. And then renewables’ share of electricity has to go from 20% to 80%. Some simple maths tells you you’re getting between an eight and a 16-fold increase in renewable energy over the next 30 years. There are a plethora of investments you could look at here. Whether it’s wind-turbine generation, OEMs (original equipment manufacturers), or whether it is solar equipment, or whether it’s the semiconductors. Mr Griffin named the German power semiconductor business Infineon as a potential opportunity as its addressable market multiplies. In terms of the areas of where Munro Partners is thinking there will need to be significant areas of investment, it thinks that there are opportunities with “many climate related technologies are in their infancy and thus have significant long-term growth potential”. What areas will need huge investment? Munro Partners points out areas like electric cars, energy efficiency, hydrogen, batteries, distribution grids, transmission grids, renewables, heating, charging stations, buses and tracks. Circular economy solutions is another area that Munro Partners is looking at, that’s where there are efforts to improve recycling, use alternative packaging materials and manage wastewater. Munro Partners is a globally-focused fund manager, so didn’t name any ASX shares to think about. But there are some ASX shares that have a growing exposure to green initiatives and decarbonisation. One example is Australian Ethical Investments Ltd (ASX: AEF) , which is a fund manager that tries to find investments that are both compelling to make returns and fit a number of ethical/green criteria for investors. Cleanaway Waste Management Ltd (ASX: CWY) is one of the biggest businesses involved in the recycling sector. It’s currently rated as a buy by the brokers at Macquarie Group Ltd (ASX: MQG) . Macquarie itself has a growing division that specialises in lending for green projects. Being the resource-heavy stock market that it is, the ASX has lithium miners like Pilbara Minerals Ltd (ASX: PLS) and Orocobre Limited (ASX: ORE) – both rated as buys by Macquarie. Even Wesfarmers Ltd (ASX: WES) is getting in on the lithium mining action with Mt Holland. Should you invest $1,000 in Macquarie right now? Before you consider Macquarie, you'll want to hear this. Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Macquarie wasn't one of them. The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more. * And right now, Scott thinks there are 5 stocks that are better buys.