Climate change investing continues to gather pace with US$87.8 billion of inflows into global sustainable exchange-traded-funds (ETF) in 2020, up almost 3-fold from 2019.
An estimated US$50 trillion to US$100 trillion in capital investment will be required to achieve a “net-zero” global economy. This is a super tailwind for investors and one you don’t want to miss out on.
Each of the following ETFs would be appropriate for the satellite component of your portfolio. For more information on the core & satellite approach read on here.
1. VanEck Vectors Global Clean Energy ETF (ASX: CLNE)
The VanEck Global Clean Energy ETF provides investors with exposure to 30 companies in the provision and production of Clean Energy. These companies have operations in a range of clean energy industries including biofuels, geothermal, hydrogen, solar and wind.
The ETF is new, only listing in March this year. However, the underlying index has an impressive one-year return of 82.65% and a five-year return of 22.17% per annum.
CLNE is well-diversified geographically, with holdings in the United States (37.4%), Spain (9.6%), Denmark (9.1%), Canada (8.3%), China (7.8%) and New Zealand (7.8%).
With a management fee of 0.65%, CLNE offers a unique ETF solely focused on powering the future.
2. BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
The BetaShares Global Sustainability Leaders ETF provides investors with exposure to the 200 largest climate leaders in markets outside of Australia. Notable stock holdings include Apple Inc (NASDAQ: AAPL), Home Depot Inc (NYSE: HD) and PayPal Holdings Inc (NASDAQ: PYPL).
It has a rigorous ethical screening process. First, it excludes unethical practices such as fossil fuels, gambling and junk foods in addition to companies who lack board diversity or have a history of human rights/supply chain issues. Then the index selects the best climate companies across the globe.
Since its inception in July 2020, ETHI has returned 27.15%. The underlying index has a 5-year return of 27.76% per annum. If you had invested $1,000 five years ago you have $3,403 today before fees.
ETHI’s 0.59% management fee is the lowest among the three ETFs. I personally own units in the ETF and use it to gain exposure to the climate leaders of tomorrow.
For more information on ETHI, check out our free ETF report here.
3. ETF Securities Battery Tech & Lithium ETF (ASX: ACDC)
The ETF Securities Battery Tech & Lithium ETF provides investors with exposure to battery storage and lithium producers. Notable stock holdings include Tesla Inc (NASDAQ: TSLA) and Mercedez Benz owner Daimler AG (ETR: DAI).
ACDC includes 31 companies across the full supply chain, from the start of lithium exploration and mining all the way through to the production of battery technologies.
Since its inception in August 2018, the ETF has returned 28% per annum. The underlying index has a one-year return of 96.1% and a five-year return of 28.9% per annum.
Despite a rocking ticker code, ACDC has a management fee of 0.69%, which is a fair dent in your annual returns.
For more information on ACDC, check out our free ETF report here.