For all the talk about climate change, net-zero and sustainability, and the related investment options, it might feel as though oceans are overlooked. This is a puzzling thought when considering most of the world is covered in water. However, the “blue economy” is gaining prominence.
With those gains come more applicable investment avenues, including the newly minted KraneShares Rockefeller Ocean Engagement ETF (KSEA). The fund, which debuted earlier this month, is actively managed and subadvised by Rockefeller Asset Management. The rookie exchange traded fund could prove to be one of the more credible plays on the blue economy (BE).
While there is some fluidity in defining BE, it is ocean-centric and has climate and sustainability implications. This makes it relevant to environmental, social, and governance (ESG) and values-driven market participants.
“It is now a widely used term around the world with three related but distinct meanings: the overall contribution of the oceans to economies, the need to address the environmental and ecological sustainability of the oceans, and the ocean economy as a growth opportunity for both developed and developing countries,” according to the Center for the Blue Economy.
Unheralded Blue Economy Is Massive
Underscoring the potential long-term potency of KSEA is the point that BE is massive in scale. This belies its often-overlooked status on the global economic stage.
“The blue economy is estimated to be worth more than US$1.5 trillion per year globally. It provides over 30 million jobs and supplies a vital source of protein to over three billion people,” according to the London School of Economics. “While it has been eclipsed in recent years by a greater focus on the ‘green economy’ (that is, the role of primarily land-based activities in the economic transformation required to transition to a low-carbon future), a renewed interest in the blue economy (also sometimes referred to ‘blue growth’) is indicated by the OECD prediction that the ocean economy may double in size to $3 trillion by 2030.”
Data points such as those could imply utility with KSEA, owing to the ETF being actively managed. An investment thesis may benefit from active management rather than the constraints of index-based strategies.
For its part, KSEA, which holds 47 stocks, isn’t constrained at the sector level, nor does it have geographic limitations — two desirable attributes when it comes to investing in the blue economy. KSEA’s annual fee is 0.86%.
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