Touchstone Investments has launched a Climate Transition ETF allowing investors exposure to companies poised to prosper from the fight against the climate crisis.
The actively-managed ETF will typically hold around 40-60 stocks that fall into three categories: solution providers, transition leaders and adaptation opportunities.
These are companies whose growth will benefit from regulations, innovations, services, or products related to the global fight against or adaptation to climate change. It includes traditional corporates such as Mercedes-Benz as well as emerging companies like Danish renewable energy provider Ørsted.
This is the first thematic ETF developed by Touchstone Investments, a member of Western & Southern Financial Group, which has already put out four other active ETFs. Thematic investing is a focused way to invest in today’s top trends and the “megatrends” of tomorrow, like the transition to a low-carbon economy. It has boomed in the last four years, with global assets in thematic funds almost tripling between 2019 and 2021 to reach $806bn, according to Morningstar.
Blake Moore (pictured), president and chief executive officer of Touchstone Investments, said: “With interest in both thematic and sustainable investing on the rise, the Climate Transition ETF seeks to provide advisers and the investors they serve with an opportunity to better position investment portfolios and meet long-term goals.”
For its first foray into climate-related ETFs, Touchstone picked Lombard Odier Investment Managers as HEAT’s sub-advisor. Paul Udall, portfolio manager for HEAT at Lombard Odier IM, said: “The transition to a net-zero and climate-resilient world is one of the greatest challenges – and investment opportunities – of our time,” said.
“We are thrilled to have been selected by Touchstone as the sub-advisory partner of choice to expand their capability in this space. We have a shared prioritization of actively managed strategies that create opportunities for investors amid the climate transition.”