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Brookfield Global Renewables and Sustainable Infrastructure
UCITS FundIndustrial Revolution 4.0: The Time for Renewables
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Industrial Revolution 4.0 – Global Renewables
Renewables and sustainable infrastructure have hit an inflection
point, and we believe they are driving the latest Industrial
Revolution. As technology disruption and innovation have driven the
cost of renewables to historic lows, further adoption is set to
dramatically increase. We see exciting opportunities for investors
ahead. We delve into the current state of power generation across
the world, why we believe use of renewable energy and sustainable
infrastructure is primed to accelerate, and the characteristics of
the companies in our investment universe. We also address the
importance of considering ESG factors when conducting due diligence
on these companies.
1st Industrial Revolution 3rd Industrial Revolution
2nd Industrial Revolution 4th Industrial Revolution
MECHANICAL PRODUCTIONCoal, water and steam led to the creation
of new manufacturing processes
ELECTRONICS AND INFORMATION TECHNOLOGYComputers and digital
systems – including transistors, microprocessors and robotics – led
to automation
ELECTRIC POWERInvention of electricity enabled mass
production
GLOBAL RENEWABLESTechnology disruption and innovation is driving
the transformation of the world’s energy supply toward Global
Renewables: wind and solar, clean power, clean technology and water
sustainability
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With Change Comes Opportunity
Renewables are expected to represent the majority of future
global power generation. Today, just 9% of the world’s electricity
is produced from wind and solar energy. Coal is being phased out of
many European countries, but it still accounts for 40% of
production in countries such as China, India and Australia. We
anticipate an overwhelming shift toward renewable power sources
over the next 30 years.
FORECAST: A REVOLUTION IN ENERGY SOURCES
RENEWABLES CASH FLOW CHARACTERISTICS
Renewable infrastructure firms have exhibited stable and growing
cash flows, while continuing to invest in growth opportunities. We
believe there will be accelerated capital deployment in the coming
years and the shift to renewables will drive significant earnings
growth and shareholder returns while offering good downside
protection.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
205020402030
Forecast
9% Wind & Solar
62% renewables
■ Coal ■ Gas ■ Oil ■ Nuclear ■ Hydro ■ Wind ■ Solar ■ Other
48% wind & solar
31% fossil fuels by 2050
Global power generation mix
202020102000199019801970
As of May 27, 2020. Data reflect median EBITDA for companies
within the strategy's investable universe. Past performance is not
indicative of future results. Renewables is represented by the
investable universe for the model portfolio for the Brookfield
Global Renewables and Sustainable Infrastructure strategy. Global
Equities is represented by the MSCI World Index. Brookfield Public
Securities Group cannot warrant that cash flow levels will meet
historical percentages shown above. Note: Median EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization). Source:
Brookfield Public Securities Group research and estimates;
Bloomberg. See Disclosures for additional information.
For illustrative purposes only. Source: Brookfield Public
Securities Group LLC. See Disclosures for additional
information.
Infrastructure-Like Assets
Historical Cash Flow Characteristics
Essential services with inherently inelastic demand, limited
competition
Regulated or contracted revenue streams, often linked to
inflation
Stable cash flow, even in times of economic contraction
Operating cash flow stability has driven lower cost of capital
and elevated valuations
6.8% Avg.
2.3%Avg.
Annual EBITDA Growth Forecast
■ Renewables ■ Global Equities
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
20222021202020192018201720162015201420132012201120102009
3
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Changing with the Times: The Electric Grid
GRID OF TODAY GRID OF TOMORROW
• Most electricity is produced at centralized power plants from
conventional sources like coal, natural gas, oil or nuclear
power.
• To a lesser extent, generation comes from renewable sources
like solar, wind and hydro.
• A greater portion of electric generation will come from
renewable sources as fossil fuel-powered plants are decommissioned
in favor of utility-scale wind and solar generation.
• Additionally, distributed generation (DG) systems, such as
solar panels or small-scale wind turbines, will be installed at or
near the location where energy will be used.
GENERATION
• Electricity is transmitted over long distances using a network
of high-voltage transmission lines.
• Existing high-voltage transmission lines will also include
smaller-scale transmission networks, incorporating new technologies
to increase efficiency and reduce energy losses.
TRANSMISSION
• Today, less than 3% of delivered electric power in the U.S. is
cycled through a storage facility.
• Investment in battery technology is critical to be able to
store and reliably use renewable power.
• Advancement in batteries, fuel cells and other grid-scale
storage technologies are ongoing to solve for the storage and
delivery of renewable electricity.
STORAGE
• Electricity is distributed over a network of lower-voltage
lines to commercial and residential end users.
• Distribution systems will be upgraded to conserve energy loss
and equipped to integrate more sources of renewable energy through
technologies like storage and demand response.
DISTRIBUTION
• One-way distribution to the commercial or residential end
user, who pays for the consumption.
• Two-way distribution to the end user will become the new
module. The end user will pay for consumption, but through their
distributed generation systems they can sell excess energy
generated back to the grid.
• Electric vehicle batteries can help balance energy demand on
the grid—acting as distributed sources of stored energy.
• Two-way communication systems will allow for demand response
and advanced metering. This should result in end users reducing or
shifting electricity usage during peak periods in response to
real-time pricing and incentives.
END USERS
Source: Brookfield Public Securities Group LLC4
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Electrification of economy is rapidly evolving
Now Is the Time for Renewables
We are rapidly moving up the “S-Curve” as renewable energy and
sustainable infrastructure adoption continues to increase on a
global scale. We believe that investing in sustainability at this
stage in the inflection point will drive future shareholder
returns.
1 2
3
45
Technology Disruption
Technology Innovation
Economic Break-even
“You are here”
Superior Technology/ Economically Competitive
The New Normal
I. Supply-Push: Policies & Subsidies
Key Drivers: • Subsidies• Government Intervention
Key Drivers: • Economics• Public Initiatives
II. Inflection Point III. Demand-Pull: Economics &
Rationalization
TodayEarly 2000s 2050+
Adop
tion
Low
Hig
h
RENEWABLES ADOPTION PRIMED TO ACCELERATE
For illustrative purposes only. Source: Brookfield Public
Securities Group LLC. See Disclosures for additional
information.
IIILow-cost providerBold climate policies (local and global)
III
Significant investment opportunities driven by an emerging asset
class with substantial future growth potential
5
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■ Wind ■ Solar ■ Gas ■ Coal ■ Nuclear
Levelized Cost of Electricity (LCOE) Over Time ($/Megawatt
Hour)
$135
$359
$123$111
$83$102
$151
$58$43$42
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$375
$300
$225
$125
$100
$75
$50
$25
$0
$150
Cost and technology improvements have driven remarkably lower
market prices for wind and solar electricity. The chart below shows
the levelized cost of energy. This is the average total cost of
building and operating the asset, per unit of electricity produced
over an assumed duration. In other words, this is generally the
average market price that the generating asset must receive to
break even over its lifetime. Assets that rely on wind and solar
electricity will be less expensive to operate in the future.
As of June 30, 2019. Reflects the U.S. levelized cost of
electricity (LCOE), which is defined as the net present value of
the unit-cost of electricity over the lifetime of a generating
asset (often taken as a proxy for the average price that the
generating asset must receive in a market to break even over its
lifetime). Gas is represented by combine cycle technology. Solar is
represented by photovoltaic tracking technology. Source: Bloomberg
New Energy Finance, Brookfield Public Securities Group LLC. See
Disclosures for additional information.
THE DIFFERENCE TODAY: RENEWABLES ARE THE LOW-COST PROVIDER
In order for renewable power to reach a 40%-50% share in the
global power generation mix by 2050, we estimate that installed
capacity for wind and solar will have to multiply by 5x in the
coming three decades.
Expected New Renewable Power Generation Capacity (Next 30 years)
(Gigawatts)
2020Total
2050Total
NorthAmerica
LatinAmerica
Europe OtherDeveloped
Markets
OtherEmergingMarkets
China India
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
3,077
14,337
9462,009
6422,408
1,613
6592,983
~5x capacity additions
As of June 30, 2019. Projections per Bloomberg New Energy
Finance. Source: Bloomberg New Energy Finance, Brookfield Public
Securities Group LLC. See Disclosures for additional
information.
THE NEXT 30 YEARS: DRAMATIC INCREASES IN RENEWABLE CAPACITY
6
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The Brookfield Solution
The Global Renewables and Sustainable Infrastructure UCITS Fund
was awarded a AA ESG rating from MSCI. This rating is awarded to
leaders in adopting ESG investment principles.
The investable universe is defined by parameters set by
Brookfield Public Securities Group. Source: Brookfield Public
Securities Group LLC.
See Disclosures for additional information.
Each fund or ETF scores a rating on a scale from CCC (laggard)
to AAA (leader). The rating is based first on the weighted average
score of the holdings of the fund or ETF. MSCI then assess ESG
momentum to gain insight into the fund’s ESG track record, which is
designed to indicate a fund’s exposure to holdings with a positive
rating trend or worsening trend year over year. Finally, MSCI
reviewing the ESG tail risk to understand the fund’s exposure to
holdings with worst-of-class ESG Ratings of B and CCC.
O U R I N V E S T A B L E U N I V E R S E S P A N S T H E V A L
U E C H A I N A N D R I S K S P E C T R U M
The Brookfield Global Renewables and Sustainable Infrastructure
UCITS Fund provides a unique investment opportunity for the latest
Industrial Revolution.
As dedicated long-term infrastructure investors, we take a
unique approach when it comes to constructing our renewables
investment universe. We are mindful to ensure the real assets we
invest in have those key core attributes that make our asset class
so attractive.
Our investable universe spans the value chain and risk spectrum.
Renewables and sustainable infrastructure assets have high barriers
to entry, resulting in solid and visible “pricing power” over the
life of the assets. Once built, these assets are long-lived and
generate highly stable cash flows.
Water Utilities
Clean Utilities
Clean Power Asset Owners & Operators
Integrated Developers
DistributedGeneration
Wind & SolarManufacturers
Grid Modernization
Energy Efficiency
Waste & Water Treatment
Electric Vehicles & Storage
Automobile EV Manufacturers
Transitioning Utilities
Broa
der V
alue
Cha
inIn
fras
truc
ture
-Lik
e
Wind & Solar Asset Owners & Operators
More CyclicalMore Regulated
● Wind & Solar ● Clean Power ● Clean Technology ● Water
Sustainability ● Transitioning Opportunities
RENEWABLE INVESTMENT UNIVERSE CHARACTERISTICS
7
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Environmental, social and governance (ESG) fundamentals are
important factors in our due diligence and security screening
processes. Our portfolio holdings align with several Sustainable
Development Goals (SDGs). The 2030 Agenda for Sustainable
Development, adopted by all United Nations Member States in 2015,
provides a shared blueprint for peace and prosperity for people and
the planet, now and into the future. At its heart are the 17 SDGs,
which are an urgent call for action by all countries—developed and
developing—in a global partnership.
As of March 31, 2020. Source: Brookfield Public Securities Group
LLC; Agenda for Sustainable Development Goals.
1 Most relevant target: 9.4—By 2030, upgrade infrastructure and
retrofit industries to make them sustainable, with increased
resource-use efficiency and greater adoption of clean and
environmentally sound technologies and industrial processes, with
all countries taking action in accordance with their respective
capabilities.
2 Most relevant targets: 12.A—Support developing countries to
strengthen their scientific and technological capacity to move
toward more sustainable patterns of consumption and production; and
12.C—Rationalize inefficient fossil-fuel subsidies that encourage
wasteful consumption, by removing market distortions.
ESG FACTORS IN OUR PORTFOLIO
The Positive Environmental Impact of Renewables
RESPONSIBLE CONSUMPTION AND PRODUCTIONEnsure sustainable
consumption and production patterns2
CLEAN WATER AND SANITATIONEnsure availability and sustainable
management of water and sanitation for all
CLIMATE ACTIONTake urgent action to combat climate change and
its impacts
Water Sustainability
Clean Technology
Clean Power
Wind & Solar
Total Portfolio
14%7%19%60%100%
14%7%19%60%100%
0%7%19%60%86%
0%7%19%60%86%
14%0%2%2%18%
14%7%19%60%100%TOTALS
INDUSTRY, INNOVATION AND INFRASTRUCTUREBuild resilient
infrastructure, promote inclusive and sustainable industrialization
and foster innovation1
AFFORDABLE AND CLEAN ENERGYEnsure access to affordable,
reliable, sustainable and modern energy for all
% of Holdings AlignedRelevant Sustainable Development Goals
(SDGs)
8
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Brookfield Public Securities Group has been investing in listed
renewables since 2008.
Our team has significant experience investing in renewables,
both in a listed and unlisted capacity.
Access to the broad Brookfield platform encompasses:
120 years of experience in power generation
Oneof the largest public pure-play renewable businesses
globally
Over 2,800 operating employees
74% hydroelectric generation
19,000 megawatts of capacity
$50 billion in total power assets3
Contact Us
brookfield.com | [email protected]
The Brookfi eld Advantage
3 Represents assets under management for Brookfield Asset
Management, including its subsidiaries and affiliates.
9
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DISCLOSURESInvesting in the Fund involves risk. Principal loss
is possible. The Fund invests in foreign securities, which involve
greater volatility and political, economic and currency risks and
differences in accounting methods. Investing in emerging markets
may entail special risks relating to potential economic, political
or social instability and the risks of nationalization,
confiscation or the imposition of restrictions on foreign
investment. Some securities held may be difficult to sell,
particularly during times of market turmoil. If the Fund is forced
to sell an illiquid asset to meet redemption, the Fund may be
forced to sell at a loss. Since the Fund will invest in securities
in the Renewable Infrastructure space, the Fund may be subject to
greater volatility than a fund that is more broadly
diversified.
Further information, including the prospectus, annual and
semi-annual reports (when available), other sub-funds of the
Brookfield Investment Funds (UCITS) p.l.c. and most recent share
price, may be obtained free of charge from the Investment Manager,
Brookfield Public Securities Group LLC.
These documents are available upon request: Investor Relations,
+1 212-549 8343, [email protected], or
www.brookfield.com.
Under the current tax legislation of Ireland, the Fund is not
subject to Irish tax on its income or capital gains. No Irish tax
will arise for a Shareholder who is neither Irish Resident nor
Ordinary Resident in Ireland. Investors should seek professional
advice as to the personal tax impact of an investment in the Fund
under the laws of the jurisdictions in which they may be subject to
tax.
Brookfield Investment Funds (UCITS) p.l.c. has other sub-funds
in addition to this one. The prospectus and annual report are
prepared for Brookfield Investment Funds UCITS p.l.c.
The Fund and Brookfield Investment Funds (UCITS) p.l.c. are
authorised in Ireland and regulated by the Central Bank.
Brookfield Public Securities Group LLC is authorised in
Ireland.
Brookfield Investment Funds (UCITS) p.l.c. is established as an
open-ended investment company with segregated liability between
funds.
Brookfield Public Securities Group LLC ("PSG" or "the Firm") is
an SEC-registered investment adviser and represents the Public
Securities Group of Brookfield Asset Management Inc., providing
global listed real assets strategies including real estate
equities, infrastructure equities, multi-strategy real asset
solutions and real asset debt. PSG manages separate accounts,
registered funds and opportunistic strategies for institutional and
individual clients, including financial institutions, public and
private pension plans, insurance companies, endowments and
foundations, sovereign wealth funds and high net worth
investors.
The information in this presentation is not, and is not intended
as, investment advice, an indication of trading intent or holdings
or the prediction of investment performance. Views and information
expressed herein are subject to change at any time. Brookfield
Public Securities Group LLC disclaims any responsibility to update
such views and/or information. This information is deemed to be
from reliable sources; however, Brookfield Public Securities Group
LLC does not warrant its completeness or accuracy. This
presentation is not intended to, and does not, constitute an offer
or solicitation to sell or a solicitation of an offer to buy any
security, product, investment advice or service (nor shall any
security, product, investment advice or service be offered or sold)
in any jurisdiction in which Brookfield Public Securities Group LLC
is not licensed to conduct business, and/or an offer, solicitation,
purchase or sale would be unavailable or unlawful.
Opinions expressed herein are current opinions of Brookfield
Public Securities Group LLC, including its subsidiaries and
affiliates, and are subject to change without notice. Brookfield
Public Securities Group LLC, including its subsidiaries and
affiliates, assume no responsibility to update such information or
to notify clients of any changes. Any outlooks, forecasts or
portfolio weightings presented herein are as of the date appearing
on this material only and are also subject to change without
notice.
Past performance is not indicative of future performance, and
the value of investments and the income derived from those
investments can fluctuate. Future returns are not guaranteed and a
loss of principal may occur.
FORWARD-LOOKING STATEMENTSInformation herein contains, includes
or is based upon forward-looking statements within the meaning of
the federal securities laws, specifically Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements include all statements, other than statements of
historical fact, that address future activities, events, or
developments, including, without limitation, business or investment
strategy or measures to implement strategy, competitive strengths,
goals, expansion and growth of our business, plans, prospects and
references to our future success. You can identify these statements
by the fact that they do not relate strictly to historical or
current facts. Words such as “anticipate,” “estimate,” “expect,”
“project,” “intend,” “plan,” “believe” and other similar words are
intended to identify these forward-looking statements.
Forward-looking statements can be affected by inaccurate
assumptions or by known or unknown risks and uncertainties. Many
such factors will be important in determining our actual future
results or outcomes. Consequently, no forward-looking statement can
be guaranteed. Our actual results or outcomes may vary materially.
Given these uncertainties, you should not place undue reliance on
these forward-looking statements.
INDEX PROVIDER DISCLOSURESBrookfield Public Securities Group LLC
does not own or participate in the construction or day-to-day
management of the indices referenced in this document. The index
information provided is for your information only and does not
imply or predict that a Brookfield Public Securities Group LLC
product will achieve similar results. This information is subject
to change without notice.
The indices referenced in this document do not reflect any fees,
expenses, sales charges or taxes. It is not possible to invest
directly in an index. The index sponsors permit use of their
indices and related data on an "as is" basis, make no warranties
regarding same, do not guarantee the suitability, quality,
accuracy, timeliness and/or completeness of their index or any data
included in, related to or derived therefrom, and assume no
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recommend Brookfield Public Securities Group LLC or any of its
products or services.
There may be material factors relevant to any such comparison,
such as differences in the volatility and regulatory and legal
restrictions between the indices shown and the strategy.
INDEX DEFINITIONSThe Dow Jones Brookfield Global Infrastructure
Composite Index is designed to measure the performance of pure-play
infrastructure companies domiciled globally. The index covers all
sectors of the infrastructure market and includes Master Limited
Partnerships (MLPs) in addition to other equity securities.
Brookfield has no day-to-day role in managing the index. Data
presented in this report reflect performance and characteristics of
the index and not those of a Brookfield fund or composite.
The Dow Jones Brookfield Global Infrastructure Index is
calculated and maintained by S&P Dow Jones Indices and
comprises infrastructure companies with at least 70% of its annual
cash flows derived from owning and operating infrastructure assets.
Brookfield has no day-to-day role in managing the Index. Data
presented in this report reflect performance and characteristics of
the index and not those of a Brookfield fund or composite.
The FTSE Global Core Infrastructure 50/50 Index gives
participants an industry-defined interpretation of infrastructure
and adjusts the exposure to certain infrastructure subsectors. The
constituent weights are adjusted as part of the semi-annual review
according to three broad industry sectors: 50% Utilities; 30%
Transportation, including capping of 7.5% for railroads/railways;
and a 20% mix of other sectors including pipelines, satellites and
telecommunication towers. Company weights within each group are
adjusted in proportion to their investable market
capitalization.
The MSCI World Index is a free-float-adjusted market
capitalization weighted index that is designed to measure the
equity market performance of developed markets.
WilderHill New Energy Global Innovation Index captures solutions
to climate change and is composed of companies worldwide whose
innovative technologies focus on clean energy, low CO2, renewables,
conservation and efficiency.
©MSCI Inc. MSCI ESG Research is an independent provider of ESG
data, reports and ratings based on published methodologies and
available to clients on a subscription basis.
