After two challenging years and a rocky start to 2025, Proxy Renewable Long/Short Energy has posted a strong three-month rally, generating a cumulative return of 26 percent through the end of July and bringing its year-to-date performance close to positive territory. Gains were driven both by a rebound in renewable energy stocks since their April lows and sector outperformance from selective stock picking.
Following an impressive debut in its first two years after launching in late 2018, the long/short, energy-transition-focused fund struggled in 2023 and 2024 amid a broader downturn in the renewable energy and energy technology sectors. However, over its entire life since inception, Proxy Renewable Long/Short Energy has delivered an annualized return of 11.2 percent, outperforming WilderHill New Energy Global Innovation Index (NEX), which returned 6.0 percent over the same period. Signs of a turnaround are now emerging. “After a decline of more than 75 percent over the past four years for the sector, we are beginning to see signs of a paradigm shift, this time driven by business fundamentals, not political ambitions such as the Paris Agreement or Net Zero targets,” says lead portfolio manager Jonas Dahlqvist.
“After a decline of more than 75 percent over the past four years for the sector, we are beginning to see signs of a paradigm shift, this time driven by business fundamentals, not political ambitions such as the Paris Agreement or Net Zero targets.”
July alone saw the fund advance 10.9 percent, bringing the three-month cumulative gain to just over 26 percent and year-to-date performance through the end of July to a negative 1.5 percent. “The sector has delivered strong performance since its April lows, and July was no exception, posting gains both in absolute and relative terms,” notes Dahlqvist. “We have benefited from broader market optimism, where increased risk appetite has attracted buyers back into our space.”
“The sector has delivered strong performance since its April lows, and July was no exception, posting gains both in absolute and relative terms.”
A key catalyst, according to Dahlqvist and the team at Proxy P, is the rapid expansion of AI data centers in the U.S., which require massive amounts of electricity. The team expects this demand to continue growing and spreading globally. “Alongside this, the ongoing electrification trend remains intact despite negative headlines,” Dahlqvist adds. After decades of flat power demand in the Western world, consumption is now rising. Meanwhile, new capacity growth is slowing, and aging infrastructure from the 1960s and 70s is being retired. “This will create a structural supply-demand imbalance that supports higher electricity prices.”
Looking ahead, Dahlqivst expects lower interest rates in the medium term to create a favorable environment for new power investments. “Nuclear and natural gas-fired power will remain essential pillars, while renewables, storage technologies, and cleantech will also contribute, provided they can compete on commercial terms,” he concludes. “No single technology offers a complete solution; a diversified energy mix is essential.” The debate has moved beyond politics, subsidies, and tax incentives, which are no longer the primary drivers of sector performance.
