Climate change is a reality — at least, based on the research of the actual rocket scientists and other sharp minds at NASA.
So if you’re a long-term investor, why not simply tap into the zeitgeist of climate change or global warming or whatever you want to call it, and invest in companies that stand to benefit from this long-term trend?
There are individual investments to consider, including electric vehicle manufacturer Tesla Motors Inc. (TSLA) to play the rise of plug-in electrics to cut down on gasoline use or companies like Solar City Corp. (SCTY) and First Solar, Inc. (FSLR) to play the rise of alternative energy.
But these stocks are very volatile based on the unproven nature of some of their technologies, as well as frothy sentiment given their high-growth history.
If you really want to invest in climate change but don’t want the big risk of these 21st century technologies, then, where can you turn?
One answer is the SPDR MSCI ACWI Low Carbon Target ETF (LOWC), a fund that is designed around investing only in companies that have low exposure to carbon emissions and fossil fuels — the primary causes in the minds of scientists for climate change.
According to LOWC ETF’s prospectus, the fund’s components “address two dimensions of carbon exposure — carbon emissions and fossil fuel reserves, expressed as potential emissions. By overweighting companies with low carbon emissions (relative to sales) and those with low potential carbon emissions (per dollar of market capitalization), the index reflects a lower carbon exposure than that of the broad market.”
But the core components of the LOWC ETF aren’t all alternative energy companies fighting climate change. However, as mostly mainstream blue-chip stocks with minimal exposure to the problems created by climate change, these picks are best positioned to outperform in the years ahead.
Top holdings now include:
Apple Inc. (AAPL)
Microsoft Corporation (MSFT)
Johnson & Johnson (JNJ)
Wells Fargo & Company (WFC)
General Electric Company (GE)
These assuredly aren’t companies changing the world with their green technologies — except perhaps GE if you want to reach and count its nuclear reactor arm. But remember, the LOWC ETF isn’t comprised of alternative energy startups but rather companies with low carbon exposure, including tech companies, healthcare companies and financials among others.
It’s an interesting idea — and one worth considering as you look long-term beyond the crude oil volatility of 2014, and to the sectors that will thrive in the years ahead no matter what happens with the Earth’s climate.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
