The WAY Group Newsletter for Financial Advisers | February 2010

Climate change - the investment opportunities

Those who read the Trade Press may have seen the announcements over the last fortnight concerning the establishment of WAY’s own in-house investment structure. Our core managed portfolio funds (Active, Balanced & Cautious) will be run by our in-house team and we intend to supplement these by launching specialist funds (with specialist managers) which will reflect the investment themes of the next 10/15 years.

Our first two special funds, launched this week, cover Gold and Climate Change. In this article, we look at the real investment opportunities that exist in investing in areas where individual and governmental will worldwide are forcing change.

Climate Change is happening. The evidence is there for all to see. It is also happening at an ever increasing rate, and the scientific probability is that man is having an impact on this. The physical impacts are well documented. Rising sea levels, growing desertification, melting ice and greater extremes of weather. What are less well documented are the investment opportunities that climate change will bring.

There are multifarious trends that are making the impact of climate change even worse. The global population is increasing at an alarming rate. A 30% increase is forecast for the next 40 years. This will put greater pressure on natural resources that are finite, and in some cases, dwindling. Demand will inevitably grow for clean, fresh water, food, timber and the like. There will be a massive demand for cars, and construction materials. There is already a growing demand for energy. Yet we only have so much to go round. Crop production is diminishing, and the increasing demand for energy can very easily exacerbate the problems of climate change.

Although the Copenhagen Conference was a disappointment in many respects, in that it didn’t provide a clear routemap to address the issues of climate change, it is worth remembering that it is only part of a process that must go on.

Climate Change is happening and the need to provide solutions will only intensify. That is why there will be economic and investment opportunities.

The Investment Opportunities From Climate Change

First of all, the demand to find new, cleaner and more efficient sources of energy is huge. And so is the level of investment that is being committed to this. In the USA alone, President Barack Obama has promised $150 billion of investment into cleantech industries, over the next decade.

The demand for clean water and food will inevitably grow. We need to find new ways of producing both of these. The demand for resources such as timber, iron and steel are forecast to soar.

There will be major investment needs into the infrastructure of industries such as waste management and travel.

Then there is the adaptation work that is needed to make existing housing and businesses more energy efficient.

The car industry is changing rapidly towards new and more efficient means of propulsion.

And there is the climate change mitigation work that is going to be needed to protect society from the impact of rising sea levels and desertification that is already happening. After all, we can’t move cities such as London; we will have to work to protect them.

The need to find solutions is becoming increasingly urgent. The industries and companies that create and develop these solutions are likely to do very well.

That is why the opportunities for investors are so exciting.

A Unique Approach To Climate Change Investing

Even through the recent recession, the Climate Change sector was one that grew very significantly. New funds continued to be launched, as fund management groups recognised the economic potential of investing in climate change. This means that there are now a very wide range of funds available for the investor. There are some general funds. But more often than not the funds are single focus honing in on specific aspects of sustainable investing such as clean tech, timber, agriculture water, or solar parks.

The challenge for the investor that wants to both support and benefit from developments in the climate change world is that they are spoilt for choice. And the experience and expertise of different fund managers varies a great deal, as this is a relatively new sector.

It is also worth pointing out that climate change investing is very different from ethical investing. One of the accusations levelled at ethical investments has been that they produce lower returns than some other investments because they are linked as to where they can invest. Climate Change funds are not screened or limited in this way. They can invest wherever they like, as long as it is consistent with the remit of the fund.

The approach that we have taken is to create a fund of funds that aims to bring together the best talent, experience and ideas from across the climate change spectrum. We will invest in funds that are led and managed by experienced and proven fund managers. We are open to new ideas and projects, but only if the research and the managers are of proven high quality. Our aim is to bring together the best in sustainable investing.

Yours sincerely,

Eddie O'Gorman
UK Head of Sales & Marketing
9th February 2010.

– Ends –

Plan Documents:

 Click to view/download:
WAY Green Portfolio Fund - Investment Adviser Profile Factsheet (Launch Version)

 Click to view/download:
WAY Green Portfolio Fund - The Case For Climate Change Investing

 Click to view/download:
WAY Green Portfolio Fund - Initial Asset Allocation

How to contact us

We hope you found this article informative and that some of the issues raised will prove useful for developing business with your clients? If you wish to discuss any matters arising from this article or, indeed, want to talk to us about any of WAY's products, then you are most welcome to call either Tony Lyons, IFA Support Manager, or Mark Benson TEP, Technical Manager , on head office telephone number: 01202 890895. Or, if you prefer, you can use the website: Contact Form to get in touch. We look forward to hearing from you.

The WAY Group Newsletter for Financial Advisers | February 2010

Please Note:
This document has been prepared for Financial Intermediary Clients and Professional Associates of WAY Investment Services Ltd and is not intended for and must not be distributed to Private Investors. This document does not constitute investment advice or a recommendation to purchase or sell any security. The investments and services referred to in this document may not be suitable for every investor and if in doubt independent financial advice should be sought. No representation or warranty is given (express or implied) as to the accuracy, completeness or correctness of the information nor the opinions, interpretations and conclusions contained in this document. No liability is accepted whatsoever for any loss howsoever arising from any information in this document subject to the rules of the Financial Services Authority or the Financial Services and Markets Act 2000. Past performance is not necessarily a guide to future returns and changes in rates of exchange between currencies may cause the value of investments to rise or fall. Share prices, values and income can go down as well as up and investors may get back less than their initial investment. WAY Investment Services Ltd is an Appointed Representative of WAY Fund Managers Ltd which is authorised and regulated by the Financial Services Authority.