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Eco-Friendly ETFs To Commemorate World Environment Day

By Zacks Investment ResearchStock MarketsJun 03, 2016 02:00AM ET
Eco-Friendly ETFs To Commemorate World Environment Day
By Zacks Investment Research   |  Jun 03, 2016 02:00AM ET
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Slow poisoning the earth in the name of progress has resulted in industrial and technological advancement. Little did anyone guess how violent the payback could turn. The wrath of nature is so hard to tame that the whole world is now desperate to arrest global warming that is gradually pushing the earth toward gradual extinction.

Needless to say, this very threat compels us to cool off the ills of global warming to protect the environment. While this huge task needs constant effort, June 5 has been particularly set aside as World Environment Day to commemorate the worth of the environment.

So long it was presumed that global warming leads to climate change causing rising sea levels, drought in one region and flood in others. But economists have come up with the latest theory that global warming can “cause job losses, recessions and even a tumbling stock market.”

This makes it imperative for the financial world to boost the socially responsive theme to their product lineup. As a result, we have seen a surge in environment-friendly and socially conscious ETFs lately.

There are clean energy ETFs, low carbon ETFs and even environment-oriented ETFs at investors’ disposal. There are plenty of stock options as well, although ETFs are seemingly better choices as their basket approach minimizes security-specific risks. And what could be a better option than discussing a few ETFs, dealing largely with the act of environment protection, ahead of the World Environment Day?

Below are a few such ETF options and a look at their performance.

Low Carbon & Fossil Fuel Free ETFs

Building a ‘low-carbon’ economy and battling the unsafe effects of greenhouse gases in the atmosphere have lately become a global task. Not only the developed economies, the emerging ones are also pushing themselves to attain this goal.

China intends to build a pollution-free environment. As part of this mission, the president of China and the U.S. president Barack Obama recently struck a deal to lessen carbon emissions.

In December, global leaders assembled in Paris at the COP 21 meet to chalk out an elaborate and comprehensive plan to lower carbon emissions and arrest the rise in the global temperature to 2 degree Celsius by the turn of this century. Also, rich countries like the U.S. and those in Europe assure $100 billion per year to relatively needy nations to help them to limit emissions of greenhouse gasses by 2020. As a result, low-carbon ETFs have caught investors’ attention recently.

The SPDR MSCI ACWI Low Carbon Target ETF (LOWC)

This $93.4-million ETF puts half of the exposure in the U.S. followed by Japan (8.2%) and the U.K. (6.5%). This 1,415-stock ETF looks to track stocks from developed and emerging markets that discharge lower carbons.

There is yet another global ETF, namely iShares MSCI ACWI Low Carbon Target ETF (CRBN), focusing on reduced carbon exposure. The 1,234-stock fund has amassed about $229.6 million in assets. Its geographic exposure is also pretty similar to LOWC.

Etho Climate Leadership U.S. ETF (ETHO)

This ETF has a 400-stock portfolio having a carbon emission profile that is 50–70% lower per dollar invested than the conventional broad-based benchmark. This new ETF has garnered about $2.6 million in assets (read: How to Invest 'Fossil-Free' with This New ETF?).

SPDR S&P 500 (NYSE:SPY) Fossil Fuel Free ETF (SPYX)

The fund gives exposure to the performance of companies in the S&P 500 Index that do not own fossil fuel reserves. The 467-stock fund has amassed about $80.7 million in assets so far (read: Fossil Free ETFs Head to Head: ETHO vs SPYX).

A Look at Clean Energy ETFs

It would be unwise if we do not discuss clean energy ETFs today, especially given its recent boom. Among these green ETFs, wind energy ETF First Trust ISE Global Wind Energy Index Fund (FAN) has been on a tear lately. The fund is in the green in the last one-week, four-week, year-to-date and one-year frame (as of June 2, 2016). Investors can also take a look at another
outperforming product PowerShares Cleantech Portfolio ETF (PZD) (read: Save the Earth--Target Clean ETFs).

SPDR-MSCI ALC (LOWC): ETF Research Reports

ISHARS-M L CRBN (CRBN): ETF Research Reports

FT-GLB WIND EGY (FAN): ETF Research Reports


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Zacks Investment Research

Eco-Friendly ETFs To Commemorate World Environment Day

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Eco-Friendly ETFs To Commemorate World Environment Day

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