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The biggest investment opportunity 'since the internet' is here

·News Editor
·4-min read
Decarbonising the economy is ushering in a massive investment opportunity. Source: Getty
Decarbonising the economy is ushering in a massive investment opportunity. Source: Getty

More than two decades ago, the internet promised to revolutionise the world, ushering in a frenzied stock market boom (and bust) as investors tried to ride the wave.

Today, there is another "unstoppable" change coming to the global economy. And according to some money managers, it represents the same sizeable opportunity for investors.

"The decarbonisation of the planet is clearly accelerating," argues Nick Griffin, the Chief Investment Officer at Melbourne-based Munro Partners.

Speaking to LiveWire's The Rules of Investing podcast, he explained what he sees as "potentially the biggest opportunity since the internet" for everyday investors.

World leaders are meeting this week to promote a global agenda for net-zero carbon emissions by 2050. Simply put, achieving that outcome would make the world look very different to how it looks today.

"As we sit here today, electric cars are roughly 3-5 per cent of all cars sold in the world. Renewable energy is less than 20 per cent of all electricity generation globally, and electricity is actually only 25 per cent of the energy mix," Griffin said.

"So if you truly want to decarbonise the planet, i.e. get to net zero by 2050 ... then electricity as just a share of our energy generation has to more than double.

"And then renewables' share of electricity has to go from 20 per cent to 80 per cent. Some simple maths tells you you're getting between an eight and a 16-fold increase in renewable energy over the next 30 years."

Renewable energy will play a much bigger role in the coming decades. Source: Getty
Renewable energy will play a much bigger role in the coming decades. Source: Getty

Just like the dot-com bubble, there will be winners and losers, but the trend is “huge and unstoppable,” says David Bassanese, chief economist at BetaShares Exchange Traded Funds.

“I think it has been demand led – investors are increasingly insisting on a commitment [from companies] to helping reduce carbon emissions,” he tells Yahoo Finance.

How Aussie can invest in the green disruption

The best way, at least the easiest way, to participate in the decarbonisation of the global economy is via exchange traded funds, or ETFs, which specifically focus on the sectors that will drive or underpin the change.

Bassanese points to Betashare’s ERTH fund which tracks the performance of up to 100 global companies that derive at least 50 per cent of their revenue from products and services that help reduce emissions and address global warming.

“It includes companies involved with alternative energy as well as things like alternative food production,” he says.

From semiconductors and battery minerals to wind turbines and new software solutions for sharing and dispatching energy, there is a lot to consider.

“There’s a lot of uncertainty about what’s going to be the winner ... that’s the problem.”

Since launching in March this year, the company’s “Climate Change Innovation ETF” has attracted just shy of $147 million of net inflows.

Senior market analyst at trading platform eToro, Josh Gilbert, believes the move is down to the "high social conscience" of modern investing.

"The most significant trend that we have seen is electric vehicles," he tells Yahoo Finance.

"Tesla and Nio, were amongst eToro’s most held stocks by global investors in Q3 2021, and are ultimately the poster boys for EV and renewable energy right now, with other initiatives outside of electric vehicles in solar and wind.

"Investors aren’t investing in Tesla and Nio because they expect to see every car on the road tomorrow to be electric, but it’s about the movement that we are seeing towards renewable energy and a greener future."

Other clean energy ETFs available on the ASX include Vectors Global Clean Energy ETF (CLNE). Launched in March, it tracks the S&P Global Clean Energy Index, giving retail investors easy exposure to 37 of the largest global companies involved in clean-energy production as well as related technologies and equipment.

Similarly, investors could look at ETF Securities’ battery-focused fund – the delightfully named ACDC – which tracks a group of companies involved with electrochemical storage technology and mining companies that produce metals used in increasingly ubiquitous batteries.

Make sure you check the management fees on any product and understand the risks, but to paraphrase Gordon Gekko, these days it seems "green is good".

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