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The views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
As the impact of climate change becomes increasingly apparent, we explore how investors can start to reposition away from carbon exposure. In particular, we highlight two funds we believe could serve as potential building blocks for a portfolio that seeks to both mitigate climate risk and take advantage of the opportunities associated with the transition towards net-zero emissions.
We expect the momentum towards decarbonisation to accelerate fast, creating risks and opportunities. While moving to net zero remains a long-term journey, we believe it is prudent for investors to start planning now to migitate, where possible, climate risk and take advantage of the opportunities associated with this fundamental shift.
A new reality
- 18 of the 19 warmest years on record have occurred since 20001
- 2,300+ climate laws and policies implemented2
- 93% of EU citizens see climate change as a serious problem3
New opportunities
The new reality of climate change means heightened uncertainty, but also a structural tailwind for climate-related investments with opportunities ranging from large-scale infrastructure transformation to new solutions and markets.
Of course, investors have different needs, some requiring a more conservative approach, while others have a greater focus on growth and explicit zero-carbon reduction. Yet their common goal, in our view, should be to start decarbonising portfolios and tap into this secular growth story. Below we highlight two funds that may act as potential building blocks for each type of investor as they embark on that journey.
WELLINGTON CLIMATE STRATEGY FUND — Targeting longer-term growth
Invests in companies focused on climate mitigation or adaptation, covering a broad range of opportunities in areas such as water and resource management, low-carbon transport and energy efficiency.
Key focus: Climate-change solutions
SFDR status: Article 9
ISIN code: LU1889107774
WELLINGTON ENDURING ASSETS FUND — Unlocking longer-term value
Targets a long-term, low-volatility approach by investing in companies that own long-lived physical assets. The Fund focuses on regulated electric utilities that are an underappreciated way to invest in the energy transition.
Key focus: Liquid infrastructure
SFDR status: Article 8
ISIN code: IE00BH3VJH87
Investments can lose value. Investors should consider the risks that may impact their capital before investing. Please refer to each Fund Prospectus and Key Investor Information Document for a full list of risk factors and pre-investment disclosures.
Finding the right balance
Identifying the right building blocks for your needs is a crucial step, but only part of the bigger picture of aligning decarbonisation goals with existing investment objectives, risk profiles and time horizons. In our view, a balanced approach involves access to: …
To read more, please click the download link below.
1Based on global average temperature recorded since 1880; Sources: NASA GISS, NOAA NCEI, Woodwell Climate Research Center, 31 December 2018. | 2Climate Change Laws of the World database, Grantham Research Institute on Climate Change and the Environment and Sabin Center for Climate Change Law. Available at climate-laws.org, August 2021. | 32021 Eurobarometer Survey, European Commission, July 2021.
Please refer to the investment risks page for information about each of the following risks:
- Capital risk
- Concentration risk
- Currency risk
- Foreign and emerging markets risk
- Smaller capitalization stock risks
- Sustainability risk
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