Grow with these green ETFs and mutual funds

Thematic green ETFs and mutual funds allow you to focus on a specific area of ​​the fight against climate change, from electric vehicle batteries to solar energy.

These funds offer the benefit of diversification and can hold stocks in fast-growing companies that you might feel uncomfortable buying on your own because they don’t generate any profits and have a short track record. as listed shares.

Additionally, many leading sustainable companies are based overseas. So you may not be able to buy shares of them, but these funds can.

KraneShares Electric Vehicles and Future Mobility ETFs

Take KraneShares Electric Vehicles and Future Mobility ETFs (CARS). The green exchange-traded fund tracks a global index that includes companies from across the electric vehicle ecosystem — from auto and battery makers to self-driving technology (sensors), charging stations and commodities.

KARS owns shares in several electric vehicle battery makers, including Contemporary Ameperex Technology Co., better known as CATL, the world’s largest lithium battery maker; its shares only trade in China. The other holdings are new issues. Shares of electric vehicle maker Lucid (LCID), for example, went public last July. The fund has experienced high volatility over the past three years, but its three-year annualized return of 33.9% tops all funds in the industrials sector.

Global X Lithium & Battery Tech ETF

Battery manufacturing needs to increase significantly (by some estimates, 80 times) if electric vehicle sales are to grow as expected. Global X Lithium & Battery Tech ETF (LIT) tracks an index of lithium mining and refining companies and battery manufacturers around the world.

The American lithium company Albemarle (ALB), as well as Tesla (TSLA) and TDK (TTDKY), a Japanese electronics company, are the main holdings. Expect high volatility. However, the fund is posting an impressive three-year annualized return of 40.2%.

Invesco WilderHill Clean Energy ETF

Invesco WilderHill Clean Energy ETF (PBW) is a member of the Kiplinger ETF 20, our favorite exchange traded funds list. It covers a range of renewable energy sources – wind, solar, hydro, geothermal and biofuel – and clean energy technologies.

The fund has recently been ransacked; its one-year return is a whopping 57.5% loss. But its three-year annualized return, 30.4%, is still holding up.

TrueShares ESG Active Opportunities ETF

For a large wallet, consider TrueShares ESG Active Opportunities ETF (ECOZ), an actively managed green ETF that invests in low-carbon businesses.

Managers favor a precise measure: the intensity of greenhouse gases. How many tonnes of GHGs are emitted per $1 million in revenue? The GHG intensity of the fund’s holdings is 85% lower than that of S&P 500 stocks on average, says Jordan Waldrep, chief investment officer at TrueShares.

ECOZ has generated an annualized return of 24.2% since its inception in early 2020, which is lower than the 26.3% gain of the S&P 500.

ETF iClima Global Decarbonization Transition Leaders

ETF iClima Global Decarbonization Transition Leaders (CLMA) tracks an exclusive index of innovative companies that offer products or services with an environmental impact. Green ETF holdings include offshore wind energy company Orsted (DNNGY); the all-electric Eastern Japan Railway; and Oatly (OTLY), a plant-based foods company.

Gabriela Herculano of iClima says: “A lot of funds, consider investing in companies that do less harm. We want to focus on innovation. We are looking forward, we are looking for the solution.” The fund opened in July 2021.

Fidelity Climate Action

Fidelity Climate Action (FCAEX) is also intriguing. Asher Anolic manages this new actively managed green mutual fund, which launched in June. It invests in global companies that address climate change (or its impacts) through corporate strategies or by providing technologies, services or products.

Microsoft (MSFT), Alphabet (GOOGL) and Nvidia (NVDA) are among FCAEX’s top holdings.

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