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More than ever, responsible investing is important

April 22, 2018

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More than ever, responsible investing is important

Market Insights
Thoughts on Earth Day. More than ever, responsible investing is important

Canadians are big on Socially Responsible Investing (SRI). They’ve thrown $1.5 trillion at investments that are aligned with fighting climate change, promoting human rights and other causes.

Cleantech investing is practically a textbook example of people putting their money where their mouth is when it comes to investing in their values. If you’ve already made SRI a part of your overall financial plan, it may be a bit different from what you’ve done before… but in a better way.

Comparing traditional SRI and a more thoughtful approach with cleantech investing

Traditionally, SRI investors hold the mindset of maximizing profit with their investments. We think that takes a nuanced approach.

For instance, let’s compare a big tech company that conducts most of its business online with an energy giant that owns oil wells in Alberta’s tar sands. On the face of it, you might consider the tech company greener and more socially responsible. After all, the tech company’s carbon footprint is negligible.

Some SRI funds might take the same view. They might simply eliminate the energy company as an investment category, along with related industries in manufacturing, transportation, etc – treating energy firms like tobacco companies or arms manufacturers.

But that simplistic, ‘on-the-face-of-it’ approach misses the mark. Who are some of the biggest investor in green technologies? Exxon and Shell, which we associate with fossil fuels, have spent billions on cleantech. Those supposedly ‘dirty’ manufacturing and transportation firms are doing the same thing. Those investments can have huge impacts to actually help the planet. They are actually confronting climate change, head-on.

That’s what we’re talking about when we say investors should aim for a nuanced approach to SRI. It’s why we created a Cleantech add-on for WealthBar investors, where they can add the PowerShares PZD Portfolio to their overall investment mix. PZD invests in companies focused on renewable energy, water purification, logistics and transportation, reducing environmental impact across industries.

This is a more nuanced, thoughtful approach compared with traditional SRI. And remember, it’s not just about upholding values… You’re investing – and you want a good return.

Going clean and green and helping investors retire sooner

The PZD Cleantech ETF returned over 30% last year. And as we noted when we first launched our Cleantech add-on option, over the three previous years, “the Cleantech Portfolio has earned 60 percent (17 percent annualized), compared to the resource heavy TSX Composite 14 percent (5 percent annualized).”

While recent volatility has impacted returns somewhat, it’s strong historical performance has been a win-win-win for people, planet and profit. But it’s also potentially a win for your retirement plan.

Why is now a good time to consider Cleantech? Simple. It’s easier to buy in right now

It’s no secret that Donald Trump thinks climate change is a hoax manufactured by China to hurt American manufacturing. And here in Canada, the rambunctious war of words between environmentalists, the fossil fuel industry and politicians has blown up into a public spectacle.

This has exacerbated already-high volatility in the market overall. Given the current political situation in the US, the value of Cleantech funds have dropped. That means Cleantech is essentially on sale right now.

At the same time, the Canadian government has pledged to invest $700 million over the next five years to grow the Cleantech industry. If you’ve ever wanted to add Cleantech to your portfolio, now is the time.

Consider adding Cleantech to your investment portfolio

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