The New Energy Order

Thematic Baskets are an important part of risk management frameworks; newly emerging themes can quickly change the nature of relationships between stocks and sectors, in a way that traditional multi-factor risk models are slow to capture.

15 April 2026

For investors, understanding thematic exposures in real time provides greater clarity of portfolio shape and behaviour. Thematic baskets form an important element of how we think about portfolio risk. In particular, we believe they have a role as an additional means to highlight when newly emerging themes begin to alter relationships between stocks and sectors - patterns that traditional multi-factor risk models can be slow to reflect.

• Last month we wrote about our view on Oilfield Services companies (OFS), a sector which we argued could be ascribed even greater long-term value by the market following events in the Middle East, which have served as a reminder of the importance of energy sovereignty.


• We are now seeing newly constructed Thematic Baskets reflecting this 'New Energy Order', with fossil fuels and renewable energy companies becoming unlikely bedfellows. The market is taking an increasingly agnostic view as to the source of energy supply in a multi-polar, hard power era. In our view, it also implies a different share price action between the sectors versus their history.


• We hold a high level of conviction to OFS-inclusive themes over the broader European equity benchmarks. Investors should remain cognisant of the implications of increasingly consensual positioning in the likes of Oilfield Services, but we continue to see an attractive value proposition for such a critical, hard-asset sector.

We spotted a new basket from Bank of America last week, called 'New Energy Order' which resonates with our energy sovereignty views outlined in last month's blog on oilfield services companies. Interestingly, the oilfield services companies had not been well-represented in the baskets of similar, overlapping 'real asset' themes such as 'Hard Assets, Low Obsolescence' (HALO), 'AI Facilitators' and so on. Therefore, it is notable that they are now being embraced in the universe of thematic baskets. This admittedly tends to bring greater chance of volatility due to consensual positioning, but we believe there is a firm distinction to be made between volatility and true "risk" to intrinsic value. Well‑held stocks can remain investable where fundamental conviction is supported, even if this entails higher volatility during risk‑on/risk‑off market episodes. (we'll go deeper into this in a future blog post).

The 'New Energy Order' basket, by sector, is 45% Energy, 41% Utilities and 14% Cap Goods¹. Within that, Oilfield Services alone make up nearly a quarter of the basket.

The Bank of America European ‘New Energy Order’ basket

Beyond Green v Black: why renewables and fossils are pragmatic new bedfellows

The world has firmly moved on from the 'renewables good, oil bad' narrative of earlier in the decade. The basket is testament to a new 'whatever it takes' attitude to energy supply. For us, it is nice to see an element of thematic basket validation after our initial conviction view of the theme, but it should not breed complacency, particularly given the aforementioned volatility implications of increasingly well-held stocks. That said, as we outlined in March, oilfield services stocks are currently trading at a discount to the European market average, implying potential higher earnings growth. Indeed, the simple consensus 12m forward mean P/E of the ‘New Energy Order’ basket is almost 20x, while the quarter that is oilfield services is <15x*.

We also saw the launch of a similar but broader Thematic Basket from BofA called 'Defence, Energy, Infra and Security', composed of 57% Cap Goods, 18% Energy (entirely made up of Oilfield Services), 17% Utilities*, plus some technology companies. The average consensus 12m forward P/E of the basket is 27x, greater than the 'New Energy Order' P/E of 20x*, due to the presence of Defence companies which have been ascribed much higher terminal values post the events of recent years. Oilfield Services and Utilities are the cheapest stocks in this condensed Hard Assets basket. Again, as with ‘New Energy Order’, we have high conviction in the ‘Defence, Energy Infra and Security’ theme.

The Bank of America European ‘Defence, Energy, Infra and Security’ basket

Tom O’Hara, Jamie Ross and David Barker manage European Equities strategies at GAM Investments. You can find out more information on the team here.