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Green Alpha – Investing for the Next Economy
This blog / podcast / video are an interview with Garvin Jabusch from Green Alpha asset managers. See our Video Here.
Garvin is the Chief Investment Officer for Green Alpha Advisors, where he leads investment research; conducts macroeconomic, scientific, and technological analysis; and develops and communicates the Next Economy investment approach.
Prior to co-founding Green Alpha with Jeremy Deems in 2007, Garvin had realized that traditional investment methods constrained the opportunity to have impact and achieve long-term competitive returns. How could he invest in the leaders of tomorrow’s sustainable economy if they were limited to an index of the carbon economy’s winners? Together with Jeremy, Garvin decided to throw out the rule book, found Green Alpha, and begin investing in the Next Economy—a method that aims to invest only in innovative solutions to system-level risks like climate change, never in their causes.
I first met Garvin at an SRI (sustainable, responsible, impact investing conference) in Colorado Spring. I heard him speak about investing in the Next Economy.
What does Green Alpha offer?
Green Alpha is an asset manager. They use long only public equities. Their investment thesis is investing using the next economy portfolio theory.
Currently, sustainable, ESG, impact investing focusses on negative screening. Start with an index that you want to track (like the S&P500) and remove companies that you don’t support. Then modify the weighting of your holdings to get back to a portfolio similar to the target index.
Instead of trying to match an index, Green Alpha looks for companies that are trying to solve solutions to current problems and avoid companies causing systemic risks.
Morningstar categorized Green Alpha as mid-cap but they are really an all-cap fund. They do not try to match any index. They are creating their own model based on future economies.
There are issues in categorizing some companies. Solar companies may show up as technology companies.
They offer 1 mutual fund and 5 separate accounts:
The Next Economy Select fund has low minimums.
Sierra Club fund is a separately managed account have $10k. The minimum is low as requested by the Sierra Club.
The other separately managed accounts have $100k minimums.
They can be held at most brokerage firms. Folio, Schwab,
Their mission is to invest for the next economy –companies that address an increasingly warmer, more populous and resource-constrained planet.
Green Alpha is aggressive with proxy voting. They do not engage to make changes in companies because they do not own companies that cause problems.
Fixed investments
They use a third party to select green bonds for the fixed portfolio. Green Alpha gives them a list of companies to use.
What areas are you investing
Everywhere there is a disruption to solve a risk. They invest in: water, transportation, energy, agriculture, internet of things, waste to value, biotech and medicine, financial services, real estate, education. In agriculture, they invest in indoor farming – very water efficient but energy intensive. Artificial intelligence is another area they are investing in.
Need to be careful to find companies performing well now while looking at what opportunities are in the future.
Performance
Green Alpha follows closest a global index but they move differently than most indexes.
This podcast, blog and video are for informational use only. We are not making investment recommendations. This is not an appropriate investment for everyone. As with any investment, please read the prospectus and discuss it with your financial planner.