Climate Change Mutual Funds

Creators of mutual funds and exchange-traded funds (ETFs) are always looking for new fund ideas that will attract investors. I have an idea for climate change funds.

Suppose that two funds were to hold assets likely to be affected by climate change, such as ocean-front properties. The “scientists’ fund” would short such properties on the theory that they will go down in value as ocean levels rise. The “deniers’ fund” would buy such real estate on the theory that it will be fine and is likely underpriced on fears of rising oceans. No doubt there are many other types of financial assets whose value would be affected by climate change.

So, instead of sitting in a bar and arguing about whether climate change is real, people would be able to get some real skin in the game by risking their own money.

Comments

  1. AnonymousMay 26, 2015 at 7:35 AM

    Surprised no one has created a "futures" market for global warming yet.

    ReplyDelete
    Replies
    1. SSTMay 29, 2015 at 9:14 AM

      There is, kind of, for 15 years already:
      http://www.cmegroup.com/trading/weather/

      Delete
  2. AnonymousMay 26, 2015 at 9:40 AM

    I would seriously LOVE to (and have looked for) a way to invest at least a portion of my money in specific causes (or avoiding specific causes) that I do (or don't) believe in. The so-called "social index". I accept that such a strategy may negatively impact my returns, but I would be willing to do it anyway if it was something that I believed in.

    These are surprisingly hard to find. The only one I am really aware of in Canada is the iShares Jantzi Social Index. I don't know whether it's that there are too many causes/not enough willing investors, that the "rules" of these are hard to design/measure/enforce, or maybe just that nobody cares. But I actually agree there's a space for something here, because I own (indirectly through index funds) shares of Tobacco, firearms, and probably a huge list of unscrupulous companies overseas that I don't even know about ... maybe I don't want to own those.

    ReplyDelete
    Replies
    1. Michael JamesMay 26, 2015 at 9:49 AM

      @Anonymous: You suggest an interesting variant of my fund ideas where the funds are designed to only invest in socially responsible investments as they relate to climate change. What I was suggesting is funds that are designed to be speculative. They would allow people to use real money to bet that climate change is real or to bet that climate change is not real.

      Delete
    2. AnonymousMay 26, 2015 at 10:47 AM

      I see now. You are suggesting more "passively" betting on whether an outcome will happen. Whereas I think what I am looking for is some way to actually "influence" or direct my money to (or away from) certain causes so as to potentially actually drive an outcome. (certainly not with just my money, but maybe if enough people did!)

      Delete
    3. Michael JamesMay 26, 2015 at 10:59 AM

      @Anonymous: Your idea is certainly more socially useful.

      Delete
    4. AnatoliNMay 26, 2015 at 11:52 AM

      I'll join the Anonymous: I want to put my money where my values are. This is - not to support tobacco, weapons and such. I do not care if my profits may be lower, I will gain much more support of my values. Besides, I think on the long-term socially responsible companies will be more profitable too.

      Delete
  3. Steadyhand_chris May 26, 2015 at 11:08 AM

    Anonymous- a group like Toniic might be what you're looking for- http://www.toniic.com/

    ReplyDelete
    Replies
    1. AnatoliNMay 26, 2015 at 12:08 PM

      Toniic is a deal-based investment group. I'd rather go for an index.

      Delete

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