Why climate change investing offers super-normal growth prospects

CLIMATE CHANGE

Simon Ellis, managing director at L&G Investments, looks at the trend behind environmental investing.

There are a growing number of funds entering the market being branded collectively as “climate change funds”. And while the strategies of these funds can differ significantly, most have some common characteristics. The most common is the tendency to invest in renewable energy, a sector which has seen severe volatility over the last two years. But what is driving this volatility? Renewable energy stocks have several endogenous and exogenous risk factors contributing to volatility and it is sometimes difficult to separate the merely annoying market “noise” volatility from the more serious ...