Explore the Thinking behind our investment approach

2024 will be remembered as the first-year global temperatures consistently surpassed the 1.5°C threshold above pre-industrial levels. This milestone signals a new era of climatic volatility, where we believe increasing extreme weather events will test aging infrastructure and place immense strain on the economy. Climate risk touches multiple sectors: real estate in hurricane and fire-prone regions, agriculture facing drought, insurance markets, municipal bonds, sovereign debt, and corporate valuations are all undergoing re-evaluation. We believe that this evolving landscape demands a proactive approach: identifying assets vulnerable to re-pricing, mitigating risks, and capitalizing on opportunities in sectors poised to thrive in a changing climate. Our climate adaptation and resilience strategies capitalize on structural trends in infrastructure, water resources, agriculture, and energy systems, all of which we feel are positioned for significant investment and innovation. Unlike traditional portfolios, our strategies offer lower correlation to the S&P 500 and invest in companies that we believe will become more profitable as the world warms by helping society adapt to physical climate disruptions. We invite you to join us for our next Market Outlook Webinar, as we elaborate on our current climate adaptation and resilience investment theses and highlight the most important current events and economic indicators influencing our view on the economy, markets, and sustainability issues:

Traditional portfolios may face increasing challenges in 2025. Strong multi-year returns have pulled forward a great deal of alpha, but may temper future growth. Additionally, the concentration in mega-cap stocks and limited diversification from small-cap and international equities suggest a potential need for new, less-correlated sources of alpha. The strength of the current bull market, while impressive, may now call for proactive portfolio management to address concentrated risks. Thematic asset allocation portfolios present a compelling alternative, leveraging structural growth opportunities while addressing issues like high valuations and regulatory uncertainty. Unlike broad diversification, thematic strategies focus on macro trends that can potentially generate less-correlated alpha, offering diversification benefits tailored to today’s market conditions. By adopting these strategies, advisors can better position portfolios for potential outperformance in 2025 and beyond.

Jeff recently led a panel for the Equities.com online event, Investment Strategies Under a Trump Administration, titled “Transition vs. Addition Economy: How A.I. Changes Our View of Energy.” The purpose of the panel was to address the dichotomy of a theme that we have been focused on for a while and that is at the heart of many of our investment strategies: how to balance the world’s increasing need for additional energy with the simultaneous effort to transition to more renewable and sustainable sources. We believe that numerous investment opportunities are emerging as the world’s energy needs, in part fueled by the growth of A.I., increase and the future of energy continues to evolve. The panel largely focused on three themes: water, nuclear, and grid infrastructure, and Jeff was joined by Marc Robert, CEO of Water Asset Management (water), John Ciampaglia, CEO of Sprott Asset Management (nuclear), and Ron Pernick, Managing Director of Clean Edge, Inc. (grid), all of whom are managers that we allocate to across various investment models: Watch Online Replay If you would like to learn more about our climate focused UMAs, SMAs, Mutual Fund Models, and research service options for your financial practice, please feel free to contact us any time. We also wanted to take a moment to wish everyone a very Happy Holiday Season and New Year! May 2025 be filled with health, happiness, and success! Warm Regards, Jeff Gitterman and the Gitterman Asset Management Team

Our emails about climate solutions focus mostly on aligning investment portfolios with mitigation and adaptation. However, integrating climate risks into holistic financial planning may offer opportunities for advisors to make even more meaningful long-term client impact. In the aftermath of recent extreme weather, rising homeowner insurance premiums, coverage reductions, and HOA fees are back in the headlines. Yet, clients with significant exposure to climate risks may not fully understand the potential consequences. Moreover, some may have a false sense of confidence regarding the contribution of their home’s value to their retirement. The good news: there are ways to assess, mitigate, and manage climate risks. In this piece, we outline how these risks are impacting housing and insurance markets and identify opportunities that could help you support affected clients.

In his most recent NYSE interview, Jeff suggests that those interested in sustainable investing will likely need to re-evaluate their approach on several fronts as policies begin to shift. As A.I. demand increases and data centers expand, we see water and grid infrastructure as essential areas of focus. And as extreme weather events become more frequent, we feel that climate adaptation and resilience themes will be more relevant than ever.

Leslie Norton, editorial director for sustainability at Morningstar, recently sat down with Jeff to discuss climate-focused portfolios and the potential implications of the recent election for climate and sustainable investing. Regardless of political affiliation and regardless of cause(s), it seems clear to us that the climate is rapidly changing. As we navigate these challenging times, we are continually looking for themes that we feel are not politically divisive and make sense in a world where floods, droughts, heat, fires, tornados, and hurricanes are becoming more frequent and intense: Read Full Morningstar Article