Guinness Global Energy Y GBP Acc
Why is this fund on our radar?
Guiness Global Energy Fund invests in companies the traditional, fossil fuel, energy sectors, principally explorers and producers of oil and gas. The managers argue that there are powerful trends driving demand for fossil fuels which means that their providers should continue to deliver high growth in their earnings over the next twenty years and be rewarded by outperforming equity benchmarks. Energy is a volatile sector, and so even if the managers are right, investors should probably expect a bumpy ride. The sector delivered outstanding returns in 2022 and 2023, for example, but only after major losses in 2020.
This fund is run by a specialist team who focus exclusively on the sector. As well as meaning they have a greater chance of outperforming their sector than a generalist team, it also means they should be able to offer exposure to smaller companies and companies in less well-owned countries, other levers that could be pulled to generate outperformance. The fund made it onto our list because it scored well across a number of features we look at. It does reasonably well in falling markets, shows evidence of being actively managed and has a good ‘batting average’ – meaning the percentage of periods it outperforms versus those where it underperforms.
Skip to Our VerdictPerformance
Energy equities have been a good investment over the past five years. This might be surprising given that in 2019 and 2020, many commentators, politicians and analysts were talking about the end of fossil fuels and the transition to renewables. It has become apparent that, whatever the end result of the net zero drive, fossil fuels will be necessary for a long time, and net zero in developed countries depends to a large extent on carbon emissions elsewhere. However, it’s important to note how lumpy the returns have been. It was 2021 and 2022 when they did particularly well, and in 2023 and 2024 returns were modestly negative or positive. Returns were so high for two reasons: the reopening form the pandemic and the rapid increase in the use of fossil fuels as a result, and the ramifications of Russia’s invasion of Ukraine. After this rapid repricing, while the same basic structural picture regarding net zero has been in place, the sector’s equities have performed modestly. There are certainly potential scenarios in which the oil could spike dramatically again – if Iran closes the straits of Hormuz, for example – but equally any major recession in the US or China or any sudden growth in supply could see energy prices fall significantly. That said, looking at the financial situation and valuation of the energy sector, the managers think it looks very attractive at the moment. In particular, high cash generation well above expected dividends they view as a promising sign for income and growth.
calendar year performance
Source: Morningstar
Past performance is not a reliable indicator of future results
Guinness Global Energy’s portfolio hasn’t kept up with the world energy index over this period, excellent returns of 48% in 2021 still well behind the index’ 64%. The managers highlight, though, that the fund has outperformed over the long run, with annualised returns of 7.9% in USD since launch in 1998 (to June 2025) compared to 6.2% for the index.
Portfolio
The managers split their efforts 50/50 between top-down and bottom-up analysis. Top-down research looks at global supply and demand dynamics, OPEC policies and developments in policy and demand for the individual fuels, while their bottom-up analysis involved a detailed look at individual companies’ management teams, balance sheets and valuations. They consider a universe of c. 370 companies, filtering them down to about 30 best ideas using valuations, earnings data and price trends.
The portfolio typically holds 30 equally weighted positions, although it may include 40–45 stocks in total as some positions are split across multiple holdings. Importantly, the portfolio construction does not adhere to any benchmark, giving it flexibility in sector weightings, including the option to exclude large-cap ‘super-majors’ entirely. This unconstrained structure enables the fund to reflect its highest conviction views. The portfolio also incorporates clear risk controls: it limits emerging market exposure to 20%, avoids excessive concentration in individual stocks, and remains highly liquid by focusing on companies with a market capitalisation above $1 billion. While the fund is not hedged for currency risk, its investments in energy-linked companies naturally provide some protection against currency movements due to their commodity price exposure.
In mid-2025, there are a number of key themes in the portfolio. A position in large and mid-caps with higher free cashflow generation is the main one, at around 30% as of the end of June. Oil and gas majors made up around 26% of the portfolio. Other key themes were: US shale exposure, rising international oil and gas spending, refiners and undervalued natural gas companies.
sector exposure
Source: Guinness AM
Our Verdict
We think this is a good option for investors wanting access to the global energy sector. The fund has struggled to beat the index in recent years, so an ETF is an option worth considering. However, we like the focus on cash flow of the managers, and think this and an active approach could be beneficial as the global energy market is transformed during the energy transition. Equally, the managers have the ability to fish in the small and mid-cap space, which could add value in future, as well as to invest in emerging markets, which don’t appear in the fund’s benchmark. The managers’ thesis that oil and gas demand will remain stronger than anticipated is an interesting one, and we think the events of the past few years support this. As such, we believe an investment in energy could do well even as the energy transition advances, due to the growth in demand for energy, particularly from the developing world, as well as the drawbacks of current alternatives.
Key Risks
- A global recession could see oil and gas prices plummet
- Single sector funds are likely to be more volatile than broad market exposure
- An acceleration of the trend to net zero could disrupt sector profitability
