Fossil fuels, fracking and fashion are contributing to the world’s environmental troubles, and the Goldman Sachs Future Planet Equity ETF (GSFP), which launched today, addresses these and other problem areas with investments in companies Goldman thinks can bolster both the environment and shareholder returns.
The product is the 22nd exchange-traded fund from Goldman Sachs Asset Management, and its first transparent, actively managed equity ETF. The new fund is part of GSAM’s thematic investment strategy, which looks to sectors the company believes are at the vanguard of economic innovation and disruption.
“We’re of the investment view that the world is changing very rapidly, and that levels of innovation and disruption are extremely elevated,” Katie Koch, co-head of GSAM’s fundamental equity business, said in a press call yesterday that discussed the Future Planet Equity ETF. “Many clients are underinvested in those themes because traditional benchmarks are very backward looking and are allocating capital to the companies and themes that have worked best in the past.”
Koch said some of GSAM’s hot-button thematic ideas include finding future tech leaders beyond the so-called FANG stocks, tapping into the wants of millennial consumers, playing on the intersection of healthcare and technology, and investing in the theme of climate transition and the future of the planet.
“Certain themes will be some of the great wealth creating opportunities of the next decade, and climate is very important among them,” she added.
The Future Planet Equity ETF focuses on five themes comprising clean energy; resource efficiency; sustainable consumption; the circular economy (namely, recycling); and water sustainability.
When it comes to clean energy, the fund looks to industries such as solar and wind power, bioenergy and carbon sequestration, among other activities. One of the fund’s holdings within this broader theme is Neste, a Finnish maker of fuel oil produced solely from renewable raw materials.
The resource efficiency theme addresses sustainable manufacturing and smart cities. It also involves electric vehicles, which GSAM believes have massive growth potential.
“Only about 4% of cars globally are electric vehicles,” said Alexis Deladerrière, GSAM’s global chief investment officer and the lead portfolio manager of the Future Planet Equity ETF. “We believe that within the next 15 to 20 years it will get to more than 80%.”
He said the fund invests in electric vehicles not through manufacturers such as Tesla Inc., but via the value chain that goes into making these vehicles. One example is Nidec Corp., a Japanese maker of precision motors that go into smartphones, computer hard drives and electric vehicles. The company’s e-axle motors are energy-saving devices that can boost the range of an electric vehicle, Deladerrière said.
And then there’s the area of sustainable consumption, which includes food and agriculture, tourism and fashion.