Climate Opportunities fund employs ‘green stimulus' theme

As governments around the world work to meet the challenges of a global economic recession, they may be tempted to sideline expensive climate change initiatives. However, ‘green stimulus' is forming a significant part of fiscal stimulus packages, with US Congress earmarking a reported $100bn of its $900bn-plus stimulus package specifically for environmental issues.

F&C Investments, market leaders in sustainable and responsible investing (SRI), is playing the ‘green stimulus' theme through its Global Climate Opportunities fund.

While the US makes up a significant part of the portfolio, the fund is also exposed to increased green infrastructure investment within emerging Asia.

South Korea has announced it is investing $85bn in green technologies over the next four years (around 2% of GDP) and should benefit some of the solar companies held within the Climate Opportunities Fund. Ambitious car standards are also being introduced, driving further innovation by manufacturers such as Hyundai, which should positively impact companies producing fuel efficient systems for the auto industry.

China has also deployed significant resources in tackling climate change. Co-manager Terry Coles said: "In a short space of time China has already built 12 gigawatts of installed wind power capacity and announced in June that this would rise to 30 gigawatts by the end of 2010. China also plans to triple its solar energy installed capacity target to 3GW by 2020, a 75-fold increase on solar capacity in 2008, and will be hugely beneficial for systems integrators and certain solar module producers".

The news is a further demonstration of the ‘green' nature of many of the fiscal stimulus packages announced by governments looking to grow out of the recession. According to HSBC, the total spending on green themes from these packages is now close to $500bn.

Coles commented: "This unprecedented injection of investment is creating huge opportunities for companies involved in climate change solutions. F&C's Global Climate Opportunities Fund is investing in these companies, which we believe will outperform the market given the commitment by governments to reduce greenhouse gas emissions dramatically over the long term, as reiterated in the recent G8 Summit."