The renewable energy transition brings with it a variety of megatrends for investors to capitalize on, but not all of the related exchange traded funds are adequately levered to the possibilities attached to this transition.
Investors seeking nimble, robust positioning for renewable energy megatrends may find the Goldman Sachs Future Planet Equity ETF (GSFP) to be an attractive idea. In a landscape dominated by index-based strategies, GSFP stands out as an actively managed alternative. That’s a point for market participants to ponder because the renewable energy transition often moves at a rapid pace that passive funds don’t always keep up with.
Consider the point about corporate-level adoption of various environmental, social, and governance (ESG) standards. The “E” is often easiest to implement, and boards are under pressure from shareholders to reduce carbon emissions — a theme GSFP is tethered to.
“Globally, companies are under pressure from their shareholders, employees and consumers to engage ethically from an ESG perspective,” noted Luke Barrs, Goldman Sachs head of client portfolio management. “We believe those that are not, will need to change fast. The tech sector is a good example of one area leading the charge – many of the Big Tech names already use renewables for powering their servers. Companies will be key in driving innovation and creating new products and services to help deliver a positive environmental change.”
Another megatrend that GSFP has the flexibility to provide exposure to is consumer demand for clean energy products. That’s a relevant point in favor of GSFP because like corporations, consumers can move more swiftly than governments to embrace renewable energy concepts and products.
“We believe this is the greatest catalyst for change among the three drivers we’ve outlined. People are becoming a lot more aware of their carbon footprint and they want to act to reduce it,” added Barrs. “Take the plant-based protein sector as an example, and the exponential growth it has experienced over the last few years. People have realised the negative impact the agricultural sector has on the environment, particularly from an emissions perspective, and they want to play their part in combatting this.”
While government spending is important and a credible catalyst for investors to consider regarding assets such as GSFP, the potential potency of corporations and consumers also highlights allure with GSFP, confirming utility in its status as an active fund.
“In our role as active managers, we see particular opportunities in companies driving innovation across clean energy, resource efficiency, sustainable consumption, the circular economy and water sustainability. We believe that the shared ambition of governments, corporates and consumers mean that companies exposed to these themes provide a compiling long-term investment opportunity,” concluded Barrs.
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