SS&C ALPS Advisors Building Blocks: Preparing for the Energy Transition

Presented by SS&C ALPS Advisors, this episode of the Building Blocks podcast features hosts Danny Schwab, Investment Strategy Advisor, and Paul Baoiocchi, Senior Investment Strategy Advisor, discussing energy transition in the marketplace.

The show’s purpose is to follow along with these advisors who offer portfolio building blocks, active insights, and a drive to lead investors down the right path for thematic and alternative growth strategies. Given the year, providing a means for clarity and insight for investors through the podcast medium has proven quite useful.

Schwab and Baoiocchi are joined by guest Andy Hicks, Director of ETF Portfolio Management and Research for ALPS, who digs into the dynamics of the traditional energy space versus the clean energy space, based on how things have shifted this year. He makes it clear that these different types of energy have continued to coexist peacefully.

On the crude/natural gas side of things, as a commodity, there have been factors based on COVID-19, among other reasons that have slowed demand, as people were driving less than usual. That said, there’s still enough going on for investors who have found ways to gain off of clean energy this year.

Because the market and sector have reached an inflection point, as Hicks explains, there’s a levelized cost of electricity (LCOE), which affects clean energy. Solar and wind are now cheaper than coal or natural gas, playing in favor of renewable energies, the consumption amount, and overall profits from an investor standpoint. While this may not be at the expense of natural gas or crude, it’s how it has overtaken coal that remains a factor for success.

That’s not to say traditional energy is going to go away anytime soon. Regardless of coal, there are too many ways for traditional energy to still play a clear role in how the world relies on it for functionality in various areas. There may be incremental change to incorporate more clean energy, but there is a unique service provided by traditional energy that cannot simply be dropped. In return, the markets will properly adjust as needed.

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