Fidelity taps into biodiversity trend with launch of new sustainability fund that warns of ‘urgent threat’ to nature
- Fidelity adds a biodiversity fund to its growing lineup of sustainable funds
- The fund will be managed by Velislava Dimitrova
- It will invest in companies providing solutions to biodiversity loss
Investment giant Fidelity has launched a biodiversity fund as part of its growing sustainable range warning of the “urgent threat” to nature over the next decade.
Biodiversity has been a largely neglected sub-sector of sustainable investment – investment in biodiversity currently stands at $133 billion per year according to the UN, compared to $800 billion for climate change.
However, this year the World Economic Forum warned that the three most serious risks over the next 10 years are related to biodiversity loss.
According to estimates by the United Nations Environment Programme, maintaining biodiversity commitments will require $8.1 trillion by 2050.
Biodiversity is the different types of life found in nature, but with humans putting increasing pressure on the planet, there is a risk of upsetting the balance.
Fidelity’s Sustainable Biodiversity Fund will provide investors with exposure to a portfolio of companies seeking to conserve biodiversity around the world.
It will be managed by Velislava Dimitrova, who also manages Fidelity’s Sustainable Water & Waste fund and its Sustainable Climate Solutions strategies.
The fund will invest in companies offering solutions to biodiversity loss as well as best-in-class companies.
Fidelity defined them as market-leading companies in the space or companies developing new solutions to minimize biodiversity loss.
“In the past, market players took nature for granted, viewing this social capital as a perpetual resource. But the evidence shows that nature continues to degrade due to human activity,” Dimitrova said.
“The world is waking up to the urgent threat to biodiversity and natural capital. Biodiversity investment solutions are emerging as the biggest investment megatrend of our generation and providing opportunities for investors.
“The theme is at an inflection point and belatedly transforming from an overlooked risk into a top priority.”
The fund will invest across all sectors, regions and market capitalizations and 70% of the fund’s net assets will be invested in companies with sustainable characteristics.
According to its key investor information document, it has a risk rating of five out of seven and an ongoing annual fee of 0.91%, with no entry or exit charges.
The launch of the fund comes as investors turn their attention to areas that cover priorities such as the environment, sustainable infrastructure and health.
A number of funds are tapping into renewables, which are seeing massive adoption and are particularly relevant in the current energy crisis.
Earlier this month, Fidelity launched its own new line of themed ETFs made up of five new products, including clean energy, electric vehicles and future transportation.
Could the big trends help you profit?
Investors trying to think long-term in volatile times can find a wide range of funds and trusts anticipating trends, such as population growth and increased investment to combat climate change.
But what do you need to know about this type of investment and what are some great ideas you could support?
This is Money recently looked at what investors should consider before risking their money in any type of thematic fund, and what big developments could provide the richest opportunities over the next few decades.
Thematic investing really gives people something to sink their teeth into and can be easy to understand, according to Juliet Schooling Latter, director of research at FundCalibre.
“There is also a reasonable choice. For example, there are a number of exciting themes that could lead to a very different world over the next decade – climate change and decarbonization, the rise of electric and autonomous vehicles, cloud computing, cryptocurrencies and delivery drones to name a few.
But she cautions that it’s not as simple as identifying a long-term theme, investing your money in companies playing the theme, and sitting back and waiting for the next 30 years or so.
“Sometimes a long-term theme is identified, but it takes many years to begin to materialize.
Investment experts also suggest funds and trusts that offer exposure to some of the most exciting trends.
> Read: What big thematic investments will bring money in the next 20 years?