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Investing in Renewable Energy

Renewable energy investment funds

Renewable energy investment funds have risen in popularity in recent years on the back of strong interest among investors for sustainable investments linked to the green transition. This increasing interest has been seen among both retail- and institutional investors. A recent survey from the alternative-investment manager Octopus found that they plan to plough $743bn into renewables in the coming decade.

Renewable energy investment funds invest in various renewable energy sources, including solar, wind and water energy. Some funds focus less on renewable energy projects and more on green-tech companies that provide technologies for renewable energy solutions.

Indirect investment into the renewable energy space is offered through, for example, funds that invest in metal mining companies. Many metals are indispensable in developing technologies needed for a green transition. For instance, several metals, including lithium and cobalt, are used in electric vehicle batteries. Gold and particularly silver have wide industrial usages linked to technologies needed for the green transformation, including solar panels and electric vehicles.

Different funds that invest in renewable energy

There are different ways of accessing renewable energy investment funds that benefit from renewable energy trends:

  • Renewable energy investment funds: Daily traded funds that offer exposure to renewable energy through investments in portfolios of companies linked to this industry. By adding funds that invest in renewable energy to an investment portfolio, the investor gets exposure to a broad range of companies that benefit from the green transition. Other funds with similar properties as renewable energy investment funds are green investment funds and clean energy investing funds.
  • ETFs: mimic the price movement of certain baskets of stocks, such as the FTSE 100. They allow you to gain exposure to a diverse portfolio of stocks and are also very liquid, meaning you can buy and sell them easily. In the renewable energy sector, there are ETFs that track a number of indices. While ETFs can be a straightforward way to get exposure to these types of companies, it is important to understand what the fees are and exactly what the ETF is tracking before you invest.
  • Metals mining funds: by investing in companies that extract metals indispensable for the green transition, these funds offer broad indirect exposure to the industry. The miners' stock prices are linked to the prices of the metals and therefore show a low correlation to the overall stock market and offer exposure to the demand for green metals. So, an allocation to a mining fund can be an indirect way of investing in funds that invest in renewable energy.

Renewable energy - an investment for the future

The future for renewable energy investment funds looks bright, underpinned by a structural shift in demand that will favour renewable energy projects. Demand-side growth is also well-supported by ambitious commitments from the EU. These include the EU's objective to achieve carbon neutrality by 2050 and the US's return to the Paris Agreement on climate change.

To meet these targets for radically reducing emissions, investment in renewable energy will need to continue. Allocating to funds that invest in renewable energy could therefore be a sustainable investment strategy for anyone looking for long-term returns.

How to invest in renewable energy investment funds

There are many different ways to get exposure towards renewable energy. Below are the two most common fund types that can invest in renewable energy.

  • Daily Traded Funds: Daily traded renewable energy funds offer exposure to a broad range of renewable energy companies. These can be traded through exchanges or fund platforms.
  • Exchange-Traded Funds: There are also ETFs offering renewable energy exposure. ETFs or exchange-traded funds are traded much like a regular stock, offering intraday pricing and dealing.

Through the daily traded fund, AuAg Precious Green, investors get exposure to a fund that holds both green tech companies, and mining companies. Investing in renewable energy via this fund gives exposure to green tech companies building products such as solar cells and batteries. The fund also gives exposure to the companies that extract the metals needed for the green transformation, metals such as copper, lithium, and rare earth metals.

Benefits of investing in renewable energy funds

There are several reasons for investing in renewable energy investment funds, some of which are summarised below:

  • Hi-tech exposure: The sector is at the forefront of technological development.
  • Increasing demand: It benefits from worldwide government support, including pledges from many countries to reduce their carbon footprints – requiring greater use of renewable energy.
  • Societal impact: Renewable energy could boost the economy by creating jobs in rural areas and lowering fuel imports.

Why invest in renewable energy with AuAg?

  • AuAg Funds offers metal mining investment funds that focus on providing exposure to precious metals and elements in green technology. What these metals have in common is that they provide protection against monetary inflation and are necessary for the transition to a green economy – trends that are highly topical today.
  • Through investments in AuAg's renewable energy investment fund, AuAg Precious Green, the investor, gets access to mining companies extracting the metals needed for electric vehicle batteries – a central part of the green energy transition.
  • AuAg's funds fit well into a portfolio of traditional assets as they have a low correlation with equities in particular.
  • AuAg offers exposure to green technology companies through the fund AuAg Precious Green. The fund has 60 per cent of the fund's exposure to green tech companies in four different areas; production of clean energy, reduced energy consumption, energy storage/power and extraction of the elements needed for the green transition.
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