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The growing urgency to mitigate the impacts of climate change has led to a global shift towards a low-carbon economy, known as the climate transition. As the world moves in this direction, climate transition stocks and exchange-traded funds (ETFs) have become increasingly important for investors.
As a result, Touchstone Climate Transition ETF (HEAT - Free Report) recently hits the market. Let’s delve a little deeper.
HEAT in Focus
The Fund invests at least 80% of its net assets in equity or equity related securities of companies that are believed to be developing solutions for net-zero emissions or companies that may benefit from positive changes in climate transition processes.
The fund deploys a high-conviction approach to individual investment selection and will typically hold 40-60 stocks under normal conditions. Nextera Energy (3.54%), Republic Services (3.50%) and National Grid (3.36%) hold the top three stocks in the fund.
How Does It Fit In a Portfolio?
Climate transition investments are essential to future-proofing your portfolio. These stocks and ETFs, focused on sustainable and low-carbon solutions, offer growth potential and risk management opportunities. Here are four key reasons to include climate transition investments in your portfolio.
Align with Global Environmental Goals: Support the global shift towards sustainability by investing in companies contributing to climate change mitigation. While climate finance rose at a cumulative average annual growth rate (CAGR) of 7%, the current levels of increase are not on track to meet a 1.5C global warming scenario. At least $4.3 trillion in annual finance flows are needed by 2030 (CAGR 21%) to evade the worst impacts of climate change.
Tap into Emerging Growth Opportunities: The global climate transition has opened up numerous growth opportunities in sectors such as renewable energy, electric vehicles, and energy efficiency.According to the International Renewable Energy Agency (IRENA), the renewable energy sector could represent a $10 trillion investment opportunity by 2050. Furthermore, BloombergNEF predicts that electric vehicles will account for 58% of new car sales globally by 2040.
Manage Risks: Mitigate climate-related risks by investing in companies adapting to the low-carbon transition, protecting your investments from regulatory penalties and stranded assets. A report by the Global Commission on the Economy and Climate suggests that the global economy could lose up to $23 trillion by 2100 due to climate change. By incorporating climate transition stocks and ETFs in your portfolio, you can manage climate-related risks and protect your investments.
Competition
There are several ETFs that could be considered competition for the new climate transition ETF HEAT. These include iShares Global Clean Energy ETF (ICLN - Free Report) , Invesco Solar ETF (TAN - Free Report) , and SPDR S&P Kensho Clean Power ETF (CNRG - Free Report) . These ETFs all focus on companies that are involved in clean energy production, which is a key component of climate transition. While each of these ETFs has a slightly different approach, they all offer investors the opportunity to support companies that are taking action on climate change.
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A New Climate Transition ETF (HEAT) Hits Market
The growing urgency to mitigate the impacts of climate change has led to a global shift towards a low-carbon economy, known as the climate transition. As the world moves in this direction, climate transition stocks and exchange-traded funds (ETFs) have become increasingly important for investors.
As a result, Touchstone Climate Transition ETF (HEAT - Free Report) recently hits the market. Let’s delve a little deeper.
HEAT in Focus
The Fund invests at least 80% of its net assets in equity or equity related securities of companies that are believed to be developing solutions for net-zero emissions or companies that may benefit from positive changes in climate transition processes.
The fund deploys a high-conviction approach to individual investment selection and will typically hold 40-60 stocks under normal conditions. Nextera Energy (3.54%), Republic Services (3.50%) and National Grid (3.36%) hold the top three stocks in the fund.
How Does It Fit In a Portfolio?
Climate transition investments are essential to future-proofing your portfolio. These stocks and ETFs, focused on sustainable and low-carbon solutions, offer growth potential and risk management opportunities. Here are four key reasons to include climate transition investments in your portfolio.
Align with Global Environmental Goals: Support the global shift towards sustainability by investing in companies contributing to climate change mitigation. While climate finance rose at a cumulative average annual growth rate (CAGR) of 7%, the current levels of increase are not on track to meet a 1.5C global warming scenario. At least $4.3 trillion in annual finance flows are needed by 2030 (CAGR 21%) to evade the worst impacts of climate change.
Tap into Emerging Growth Opportunities: The global climate transition has opened up numerous growth opportunities in sectors such as renewable energy, electric vehicles, and energy efficiency.According to the International Renewable Energy Agency (IRENA), the renewable energy sector could represent a $10 trillion investment opportunity by 2050. Furthermore, BloombergNEF predicts that electric vehicles will account for 58% of new car sales globally by 2040.
Manage Risks: Mitigate climate-related risks by investing in companies adapting to the low-carbon transition, protecting your investments from regulatory penalties and stranded assets. A report by the Global Commission on the Economy and Climate suggests that the global economy could lose up to $23 trillion by 2100 due to climate change. By incorporating climate transition stocks and ETFs in your portfolio, you can manage climate-related risks and protect your investments.
Competition
There are several ETFs that could be considered competition for the new climate transition ETF HEAT. These include iShares Global Clean Energy ETF (ICLN - Free Report) , Invesco Solar ETF (TAN - Free Report) , and SPDR S&P Kensho Clean Power ETF (CNRG - Free Report) . These ETFs all focus on companies that are involved in clean energy production, which is a key component of climate transition. While each of these ETFs has a slightly different approach, they all offer investors the opportunity to support companies that are taking action on climate change.