The ESG investing market is hot in terms of money invested globally in equity funds with a strong focus on sustainable investing practices1. For example, since 2018, investments grew from $282 billion (measured in U.S. dollars) to $829 million, according to a Morningstar report.2
With this growth of interest comes maturity in the market. And with maturity comes more unique investing opportunities—benefiting investors. For example, to date, the largest U.S. ETF launch focusing on clean energy investing was in April. The fund is a thematic fund, focusing on companies that are considered most likely to show success as the U.S. government—and other countries participating in the Paris Agreement— establishes new low-carbon initiatives.
The impact investing category of responsible investing is also growing, especially as regulations improve fund reporting measures and investors take a greater interest in supporting issues.
Another unique opportunity comes in the form of companies embracing sustainable technology, which we feel potentially offers compelling long-term investment opportunities.
As you sit down with your financial advisor to discuss your portfolio and changing your responsible investing strategies, consider these questions to ask:
What is the anticipated timing for new ESG investing opportunities?
Time and patience are very important when it comes to new and unique investing opportunities. For example, the new ETF fund mentioned earlier that was released in April isn’t yet available at RBC Wealth Management. We have a practice of carefully vetting and evaluating fund managers. This process takes time, and is designed to better inform investors about the investments they’re choosing.
For investors wanting to implement ESG opportunities immediately into their portfolios, there are many vetted opportunities in existence, and an RBC Wealth Management financial advisor can help investors set that up.
What thematic opportunities are available?
Thematic investing is impact investing with a common denominator for the companies and funds investors choose. Themes may range from climate change to gender equity, and investors use portfolios with a thematic focus to invest in the future today. Ask how setting up a thematic investing portfolio can make an impact to support your goals and values.
How will sustainable technology influence responsible investing?
We anticipate the SusTech field will grow quickly. Many opportunities already exist. From SusTech funds to ETFs to equities, different opportunities from green technologies to smart cities exist to help investors both support—and potentially benefit—companies at the forefront of developing solutions in those opportunities.
Changes are happening rapidly in the responsible investing field. Use this newsletter and communicate with your financial advisor to keep abreast of new investing opportunities as they become available.