What's going on?
BlackRock thinks this whole “habitable planet” trend could really catch on – so much so that the world’s biggest investment manager announced on Thursday it’s raised $4.8 billion for a new clean energy fund.
What does this mean?
Most of the money BlackRock looks after is invested in exchange-traded funds that passively track groups of stocks, but this new fund will fall into a division that invests in physical assets. In this case, that’ll be things like wind and solar farms, as well as electric vehicle-charging infrastructure.
Over 100 institutional investors put their money into the fund, which raised almost twice as much money as it was targeting. And that influx of cash is just the latest sign of how in-demand the renewable energy sector is becoming – not to mention the growing popularity of investing directly in wind and solar farms, rather than simply companies that operate in the space.
Why should I care?
For markets: There’s gold in them hills.
The huge demand isn’t just driven by investors trying to get in on the fastest-growing part of the energy sector, but those looking for steady returns too. Wind and solar farms, after all, generate relatively stable cash flows, which means they can provide a reliable source of income in a world of ultra-low bond yields. That might be why Norway’s sovereign wealth fund – the biggest in the world – has now diversified beyond stocks, bonds, and property by making its first direct investment in renewable energy.
For you personally: The problem – and opportunity – isn’t going away.
According to new data out this week, methane levels in the atmosphere rose by a record amount in 2020. So if you’re looking to stop pumping money into the fossil fuel and animal agriculture companies responsible for the majority of those emissions, you might want to start looking at the vegan, electric vehicle, and clean energy sectors instead…