Estimate Time1 min

Renewable energy surges into the mainstream

The transition to renewable energy sources has gained momentum in Europe since Russia invaded Ukraine in early 2022, as the European Union began to implement new policy efforts, leading to a notably improved growth outlook for certain companies, according to Fidelity Portfolio Manager Faris Rahman.

“In Europe, including the Nordic region, Russia’s offensive set into motion a dire energy crisis for the Continent because much of Europe depends on Russia for its energy needs,” says Rahman, who manages Fidelity® Nordic Fund (FNORX) alongside Allyson Ke.

The fund is a regional equity strategy that seeks long-term growth of capital by investing primarily in the securities of Danish, Finnish, Norwegian, and Swedish issuers, and other investments that are tied economically to the Nordic region.

In co-managing the fund since 2021, Rahman and Ke favor companies with compelling growth prospects that generate returns above their cost of capital over a market cycle.

That has led them to compelling opportunities in Europe. Rahman explains that the European Union, to reduce its reliance on fossil fuels and Russia, is planning a massive investment to transform its energy mix, with a heavier emphasis on renewables. “While the shift to renewable resources was already well on its way, we believe these new, supportive policies from the EU are helping to propel the expansion of renewables globally,” he says.

To capitalize, the co-managers have favored companies such as Sweden’s Sandvik (SDVKY), the fund’s seventh-largest holding as of October 31. Sandvik is a high-quality maker of underground mining equipment, operating in a global duopoly with high barriers to entry, and selling mainly aftermarket services with an asset-light business model, notes Rahman.

Global demand for copper, nickel, and zinc—all materials that Sandvik’s products and services help mine—has increased due to their importance in electric vehicles and the expansion of the electric grid, Rahman says, adding that he believes the increased need for new-market materials could help drive long-term growth for the firm.

Denmark-based wind turbine manufacturer Vestas Wind Systems (VWDRY) was another major holding at the end of October. With a renewed focus on energy security in the wake of the Russia–Ukraine conflict, as well as supportive government-sponsored subsidies for renewable energy efforts, demand for and the pricing of Vestas’s products and services has increased, notes Rahman.

“Allyson and I believe the shift to renewables represents a multiyear investment opportunity, and we continue to prefer companies that meet our investment criteria and are well-positioned amid this powerful transition,” says Rahman.

For specific fund information, including full holdings, please click on the fund trading symbol above.

Faris Rahman
Faris Rahman
Portfolio Manager

Faris Rahman is a portfolio manager and research analyst in the Equity division at Fidelity Investments.

In this role, Mr. Rahman manages Fidelity International Equity Central Fund – Consumer Discretionary sub-portfolio and comanages Fidelity and Fidelity Advisor Europe Fund and Fidelity Nordic Fund. Additionally, he is a consumer discretionary research analyst currently focusing on the European luxury, retail, and online food delivery industries.

Prior to assuming his current role, Mr. Rahman was a research analyst on the emerging markets team and covered the consumer staples and telecommunications sectors.

Before joining Fidelity in 2012, he was an investment banker at Morgan Stanley and a private equity investor at Hellman & Friedman and J.W. Childs in New York and Boston.

Mr. Rahman earned his bachelor of arts, with honors, in economics and engineering sciences from Dartmouth College and his masters of business administration from The Wharton School of the University of Pennsylvania.

Interested in mutual funds?

Choose your criteria and get fund picks from Fidelity or independent experts.

More to explore

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies.

Growth stocks can perform differently from the market as a whole and other types of stocks, and can be more volatile than other types of stocks.

Value stocks can perform differently from other types of stocks, and can continue to be undervalued by the market for long periods of time.

Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

Foreign investments involve greater risks than U.S. investments, including political and economic risks and the risk of currency fluctuations, all of which may be magnified in emerging markets.

In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so holding them until maturity to avoid losses caused by price volatility is not possible.

The municipal market can be affected by adverse tax, legislative, or political changes, and by the financial condition of the issuers of municipal securities.

The securities of smaller, less well known companies can be more volatile than those of larger companies.

Some funds may use investment strategies involving derivatives and other transactions that may have a leveraging effect on the fund. Leverage can increase market exposure and magnify investment risk. Investors should be aware that there is no assurance that a fund's use of such strategies will succeed.

Leverage can magnify the impact of adverse issuer, political, regulatory, market, or economic developments on a company. In the event of bankruptcy, a company's creditors take precedence over its stockholders.

Changes in real estate values or economic conditions can have a positive or negative effect on issuers in the real estate industry.

As with all your investments through Fidelity, you must make your own determination whether an investment in any particular security or securities is consistent with your investment objectives, risk tolerance, financial situation, and evaluation of the security. Fidelity is not recommending or endorsing this investment by making it available to its customers.

Past performance is no guarantee of future results.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917