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Seven reasons why you should invest in sustainability

Dec 18, 2019.

Demonstrating, discussing or investing: There are a number of ways to get involved in climate protection. Campaigns such as “Fridays for Future” are also changing the financial market. Sustainable funds are becoming increasingly popular with investors as investing in climate or environmental protection also pays off financially. This niche market is set to soon become the latest trend. This is demonstrated by the “IFZ Sustainable Investments Study 2019” by Lucerne University of Applied Sciences and Arts.

1. The future is young, female and successful

Among private investors, the young and females in particular invest in climate funds. Millennials – or Generation Y (born between 1980 and 2000) – are ensuring that this niche market is likely to no longer be a niche soon. Fans of sustainable funds are generally well-educated, and politically and environmentally engaged.

 

2. Pension funds and the church also agree

In terms of institutions, pension funds, insurance companies, foundations and the church are at the top of the investor hit parade. But for very different reasons: while some appreciate the lower risk, churches and non-profit organisations tend to think about investing in the future and doing good.

 

3. Environmental and climate are the big stars among the funds

Environmental and climate funds are number one among investors. But there are other interesting theme funds in the area of sustainability: for example, you can invest in the conservation of resources such as energy and water or improving the living and working conditions of certain sections of the population.

 

4. You can earn money here with a clear conscience

If you invest sustainably, you are doing something for your wallet as well as your karma. Returns are usually the same as or even better than other investments, and at a lower risk. It’s a win-win-win situation: you can earn money with a clear conscience while investing in a sustainable future.

 

5. A trend today, the norm tomorrow?

What is still a niche market today may already have mass appeal by tomorrow. New sustainable funds come onto the market every day. Invested assets are currently growing in the double-digit percentage range. And this is unlikely to change in the next five years. At present, sustainable funds only make up 3% to 4% of the offering on the financial market – but that will change.

 

6. Advisors are getting on board

The study also shows that many investment advisors need to learn more about sustainable funds. The offering is constantly changing and expanding its market share. Good advisors recognise the situation and are now getting on board by educating themselves further.

 

7. Equities are more attractive than bonds

In terms of sustainability, equity funds are more popular than bond funds. There are more different products, and in periods of negative interest rates, equities are generally more attractive. In addition, theme funds are easy to understand: investors invest in renewable energy, sustainable food production or in the environment and climate.

 

 

 

IFZ Sustainable Investments Study 2019

The “IFZ Sustainable Investments Study 2019” was published by Prof. Dr Manfred Stüttgen, Project Head, and Brian Mattmann, Project Co-Head, from the Institute of Financial Services (IFZ) at Lucerne University of Applied Sciences and Arts. In it, the two experts present the trends, investment themes and classes in the Swiss fund landscape and analyse developments in green and sustainable funds. The independent study was developed in collaboration with Generali Switzerland and other partners. You can find more information on the study (in German only) here.