Estimates regarding how much corporations and governments will spend fighting climate change vary depending upon the source, but suffice to say, the forecasts are massive. Many are in the trillions of dollars.
Yes, trillions with a “T.” Carbon and climate spending could affect an assortment of exchange traded funds, including the Goldman Sachs Future Planet Equity ETF (GSFP). New on the scene — it debuted in July — GSFP arrived at the right time because asset allocators are increasingly prioritizing straightforward, easy-to-comprehend investment objectives when it comes to environmentally sustainable funds.
They also want leverage to the aforementioned big spending trends, and GSFP checks that box. That’s a plus.
“New Moody’s research that incorporates insights from across our firm finds that current plans from companies across all economic sectors are aligned with a global temperature increase of at least 2.6 degrees C above preindustrial levels by 2100. And banks, insurers, and asset managers across the G20 hold $22 trillion in loans and investments subject to carbon transition risk,” writes Moody’s Investors Service CEO Rob Fauber in an op-ed for Barron’s.
GSFP is a relevant consideration today for multiple reasons. First, it’s intimately levered to addressing carbon issues and climate change because the fund’s member firms are developing technologies to slash greenhouse gas output. Second, the fund’s active management is conducive to a still-young investment concept, and those managers keep the fund focused on its objective, preventing it from sprawling into unrelated areas.
“We see a potential $45 trillion opportunity for those prepared to seize the moment. There is already strong market demand for sustainable goods and services, with record inflows into environmental, social, and governance, or ESG, investment products rising 140% in 2020,” adds Fauber.
There are other benefits offered by GSFP. First, it’s an example of a sustainability focused ETF that, owing to its straightforward objective, is appropriate for long-term investors, and that’s relevant because climate investing’s best opportunities will be availed over long holding periods.
Additionally, GSFP components tap into a variety of end markets — an attractive trait as more sectors join the climate change fight.
“Crucial global sectors are moving quickly to prepare for a net zero future and have delivered substantial progress in recent years. To understand which sectors are best prepared for net zero and what that means for companies, Moody’s analyzed the data regarding the decarbonization transformation of the world’s most carbon-intensive sectors,” notes Fauber.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.