http://www.businessweek.com/magazine/content/07_53/b4065050248104.htm?chan=magazine+channel_investment+outlook+2008
Set aside, for now, the really complex and costly financial implications of climate change. Ignore the tricky abstractions of carbon trading. Forget the worries over flooded cities and the ins and outs of renewable energy.
Instead, consider just a few everyday money-making ideas created by the warming of our planet. For example, oenophiles could short the stocks of vintners in drought-prone areas such as Australia or California and bet on upstarts in Canada and England, where new wineries are sprouting as temperatures rise. Or, since ski resorts are seeing less and less snow, it might make sense to buy and hold manufacturers of snowmakers.
Consider HSBC's (HBC) Global Climate Change Benchmark Index, which tracks 300 equities, spans 34 countries (11 of which are emerging markets), and includes small, medium, and big companies. Simulations of the 45 months prior to its September debut show the index would have beaten the Morgan Stanley (MS) Capital International (MSCI) global index by 70%. In November, HSBC launched a fund in Europe that focuses on a subset of about 60 companies from the index. A U.S. version, the GIF Climate Change Fund, is due by April.
Deutsche Bank's (DB) DWS Climate Change Fund beat HSBC to the American market last November. It mirrors the German DWS Klimawandel fund, which since its launch last February is up 10.4%. For DWS's U.S. offering, expect somewhat pricey expense ratios of 1.75% to 2.5% of assets.
For a lower-cost approach, stock pickers can follow the pros' logic and make their own calls. Luckily, evaluating equities on their potential to capitalize on climate change is easier than untangling the complexities of global warming. A useful approach is to split the opportunities into two broad groups, explains Mark Fulton, climate-change strategist at Deutsche Bank Asset Management: mitigation and adaptation.
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