Climate-Change Funds Try to Profit From a Warming World

Climate-Change Funds Try to Profit From a Warming World

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The financial implications of that could play out in surprising ways, said Christopher J. Goolgasian, Wellington’s director of climate research. Movable assets might become more valuable than stationary ones. “You might think about cruise ships over theme parks and farm equipment over farms,” he said.

Or you might consider investing in nontraditional sorts of farms — which is why aquaculture is one of the themes of the GMO Climate Change Fund. Its manager, Lucas White, includes in the fund less obvious industries, like fish farming and copper mining, alongside obvious ones, like clean energy and energy efficiency. Mr. White’s fund caters to institutional investors like pension funds and has returned an annual average of 8.54 percent since its April 2017 inception through February 2018, the latest information available from the fund.

“If you think agricultural productivity will be challenged, people will need to get their protein from somewhere,” he said. “Cattle is a disaster for climate change, but salmon is very carbon efficient.” Cows produce methane, a potent greenhouse gas, and tropical forests, which absorb carbon dioxide, are often razed for ranching.

Mr. White’s allocation to copper stocks is a sideways play on renewable energy. Some environmentally minded investors avoid miners, because of the pollution and political controversies that can accompany their operations. Mr. White, in contrast, bets big, allocating about 10 percent of his fund to copper diggers, including Freeport-McMoRan.

“We need an immense amount of copper to respond to climate change,” he said. The metal is required for wind and solar projects, as well as electric-vehicle-charging networks.

Not every manager in this niche views renewable energy as a crucial play. The Pax Global Environmental Markets Fund mostly avoids the sector. Instead, it holds big slugs of agriculture and water stocks; together, those total more than 40 percent of its assets.

That’s partly because the fund’s mandate is broader than just responding to global warming, said co-manager Hubert T. Aarts. “Some of what we hold is purely climate related, but the portfolio is not only that,” he said. The fund also buys companies that help deliver cleaner water and air and dispose of waste.

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