Smart investors should do both, they should invest in energy and in saving energy, as both are megatrends. They should invest in sustainable energy companies as well as companies, which develop and sell products and services to save energy and water, to produce less waste and keep the air clean and thus improve living conditions for a growing population.
Energy is necessary for the prosperous development of societies. The demand for energy is expected to increase by one third until 2035, an increase which cannot be met from renewable energy sources. Moreover, the oil and gas sector represents approx. 13% of the MSCI World Index. Institutional investors, even the ones with a sustainable or responsible investment approach, will continue to invest in energy as their mandate does not allow them to exclude significant sectors of the market as it reduces the risk-adjusted return potential.
However, due to the policy risk of a CO2 taxation to fight global warming they should carefully choose their energy exposure and avoid high CO2 fossile energy assets such as coal and energy companies with high production costs in order to invest in long-term profitable assets. They should look at energy companies with long-term forward looking management which addresses these issues in their investment policy, investing in “cleaner” fossile energy assets as well as renewable energies. We provide an intelligent investment solution with the Energy Champions Fund.
Markets for resource efficient technologies which help people and companies to save energy and water, to reduce waste and keep the air clean is growing at a high rates of 8-12% p.a. Governments globally, and particularly in emerging economies are investing trillions in resource efficient technologies to fight pollution and maintain healthy living standards in fast-growing cities e.g. in Europe:
We provide a straight-forward investment solution to invest in this megatrend with the Resource Efficiency Leaders Fund.