Investing in green technology
The transformation to a green world is an ongoing megatrend that affect our lives and the investment environment for years to come. To make this transition, we need to develop green technology (green tech). These products enable the transition to a sustainable world, and some examples of such products are solar cells, batteries, and fuel cells.
To accelerate this development, it is necessary to invest in this area to reward the best companies and products. By investing in green tech, you contribute to the acceleration of this transition.
Types of green technology investment funds
There are different types of green technology investment funds. On the one hand are actively managed equity funds investing in green technology companies, on the other hand are passively managed ETF funds that provides an index type investment to the space. The common denominator being that they provide investors with exposure to companies that, among other things, reduce energy consumption, facilitates energy storage and contribute to reduced emissions. Green tech investments are commonly referred to as sustainable investments.
Benefits of green tech investments
Green technology companies are at the heart of the green transition developing products and services within areas such as: production of environmentally friendly energy, reduced energy consumption, and energy storage. By investing in green technology and saving in green investment funds, an investor can get the following benefits:
Benefit from investing in a megatrend: The transformation to a green world is one of the major megatrends of this century. By investing in green technology, an investor can get exposure towards this trend, which can yield great returns.
Accelerate the green transition: Investing in green technology contributes to the acceleration towards a greener economy since more companies can innovate and build new products within the space.
Portfolio diversification: There are different types of green technology investments. By including both the commodities needed (such as gold, copper, silver, lithium, etc.), the companies that extract them, and the companies that use the materials to build products such as solar panels and batteries. An investor can get a risk adjusted and diversified portfolio. AuAg Precious Green is an example of a green investment fund with this type of investment strategy.
How to invest in green technology?
There are several different ways to invest in green tech:
- Shares: Buy shares in the companies that create green tech products.
- Green Technology Funds: Green technology investment funds refer to portfolios of equities focusing on green technology. There are different types of funds. When you invest in a fund, you pay a fee for an expert (fund manager) to select the underlying assets that provide exposure to green tech. There are two types of funds:
- Daily traded Fund: Often actively managed, which means that an expert reviews the holdings and rebalances at regular intervals.
- Exchange-Traded Fund: A basket of securities that follows an index and is traded like a stock.