The anti-carbon movement is losing steam. That hasn’t stopped Pictet, a large Swiss money manger, from finding clean-energy stocks that pack some power.
The greenies are on the run. So how is it that the low-carbon portfolio run by Xavier Chollet is just now doing so well?
Chollet oversees the Clean Energy Transition strategy for Pictet, one of the larger Swiss money managers. It’s a tough assignment. Over the past decade, alternative-energy stocks have fallen well behind the S&P 500 index. But this year they turned a corner. So far this year Chollet’s $5.5 billion collection of stocks is up 26%, 9 points ahead of the S&P 500.
There are two elements to the Pictet portfolio’s survival. One is that Chollet is permitted to define “transition” in a very expansive fashion. He has only 24% of the money in renewables like solar and wind. The rest tracks other themes, like energy efficiency in semiconductors, energy efficiency in buildings and products that make industrial processes either more efficient or cleaner.
The other safety valve is that Chollet shuns the most speculative ventures of the green-energy genre. He says, “We want to invest in companies that are profitable and don’t need subsidies.” That rules out a lot of obvious candidates for a carbon-shunning fund. Green-hydrogen companies, for example, have a way of losing money even when collecting government handouts. He won’t touch them.
So it was that during the insane run-up in solar and hydrogen stocks during 2020, Chollet lagged other alternative-energy managers. The next year solar and hydrogen crashed, but the Pictet fund was up. Over the long term, his looser notion of investing in an energy transition, and his favoritism toward somewhat conservative stocks, has given him staying power.
Chollet, 51, grew up in Geneva and joined the Pictet home office there immediately after getting business degrees from the University of Lausanne and the University of Miami. He has been on the clean-energy strategy since 2011. Most of his clients are institutional or individual investors in Europe; recently, for the U.S. market, his employer opened the Pictet Cleaner Planet ETF. Chollet’s team is responsible for half the stock picks now in the U.S. fund.
Chollet speaks with a French accent but his portfolio has an American slant, with 74% of assets in U.S. companies. His biggest bet, with not quite 5% of assets, is on Nextracker, which makes equipment to aim solar arrays at the sun. It’s in the black. Its share price has more than doubled this year.
This, even though 2025 would seem to be a bad year to bet on solar. To the horror of environmentalists, Bill Gates, just four years after penning a book on the climate catastrophe, is now opining that the money spent fighting carbon might better be spent fighting poverty and disease. And then there are the politicians spouting the slogan “Drill, baby, drill.”
With a fossil-fuel lover in the White House, how can renewable energy be doing so well now? Because investors, anticipating the worst, were pleasantly surprised this year. That allegedly beautiful tax bill that President Trump pushed through didn’t kill alternative-energy subsidies. It mostly threw on some deadlines and some buy-American provisions. Says Chollet: “The rules of the game for the current administration in solar in the U.S. are way better than everyone expected.”
What would happen in a world without rules—with, that is, neither mandates nor subsidies? Wouldn’t solar and wind be dead?
Not at all, says Chollet: “Close to 90% of the new power additions in the world come from renewable and storage, not from nuclear or gas or coal, because it makes economic sense.”
He pulls out a chart of electricity generation costs in the U.S. With fuel and capital costs combined, a kilowatt-hour of onshore wind costs 5 cents, solar 6 cents, natural gas 10 cents. He concedes that the numbers for the two renewables would be higher if you included the cost of batteries to supply juice during doldrums and darkness. But even with batteries attached, he says, renewables are cheaper than fossil-fuel or nuclear power generation. The costs he cites, importantly, are before any benefit from government subsidies.
Put costs aside for a moment, Chollet goes on. Think about availability. Artificial intelligence research by Microsoft, Meta, Amazon and Alphabet will draw lots of power, sometimes a gigawatt or more per installation. (A gigawatt would power a large city.) Those AI fanatics want their energy now, not later.
The delivery time for a solar plant in the U.S. is a year, Chollet says, for an onshore wind farm two years. A gas-powered plant needs turbines for which the wait, including installation time, is four years. What about nuclear? Even if cookie-cutter plants (“small modular reactors”) catch on, it will take a utility ten years for the permits and the construction, he says.
Trump doesn’t like renewables and he doesn’t like solar panels that come from China. But he also doesn’t want China getting ahead in AI, Chollet says. So Trump won’t get in the way of the solar that will power data centers. Chollet has stakes in solar companies (like Nextracker) that supply utility-scale projects. He avoids companies (like Sunrun) doing residential solar.
Better still, Chollet’s definition of what is meant by “clean energy” allows him to get another piece of the hot data center business. So far Nvidia has been the conspicuous beneficiary of AI spending, but Chollet sees the arc of technology bending toward two other semiconductor companies. He has stakes in Broadcom and Marvell Technology, which make “application specific integrated circuits.” ASICs, while less flexible than Nvidia’s graphics processing units, are less gluttonous with electricity consumption. Chollet is in semiconductors for the growth; he’s allowed to be in them on the theory that specialized chips will do less damage to the planet than the usual kind.
High-growth stocks tend to be both expensive and risky. Broadcom trades at 93 times trailing earnings. In Chollet’s eyes its growth makes it affordable at 29 times the earnings he expects two years from now. As for risk, that is dampened by the boring stocks in the Pictet lineup, such as Xcel Energy, a midwestern utility; Linde, which sells gases to make industrial processes more efficient, and TopBuild, which sells garage doors and asphalt shingles.
Wait. What’s green about garage doors? TopBuild also sells insulation. By reducing heating and cooling loads, insulation preserves the planet.
Technology is uncertain. The hot and cold of carbon politics is uncertain. But there is something to be said for accepting risk while moderating it. In 2020 the iShares Clean Energy ETF delivered a 141% return, Morningstar reports, leaving Chollet’s stocks far behind with only 54%. But in 2021 the iShares fund lost money while Chollet’s portfolio gained 12%. Over the past decade (through September) iShares has delivered a 7% annual return in clean energy, Pictet 12%. For Chollet, adopting a light shade of green has been a good strategy.
More from Forbes