Fidelity taps into biodiversity trend with launch of new fund

Fidelity taps into biodiversity trend with launch of new sustainability fund as it warns of ‘urgent threat’ to nature

  • Fidelity adds a biodiversity fund to its growing sustainable funds range 
  • 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 investing – investment in biodiversity is currently $133billion per year according to the UN, compared to $800billion on climate change.

However, this year the World Economic Forum warned the top three most severe risks over the next 10 years are linked to the loss of biodiversity. 

The UN Environment Programme’s estimates maintaining biodiversity commitments will require $8.1trillion between now and 2050.

Biodiversity is the different kinds of life found in nature, but with humans putting increasing pressure on the planet there is a risk of disrupting the balance

Fidelity’s Sustainable Biodiversity Fund will give investors exposure to a portfolio of companies looking to preserve biodiversity across the globe.

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 providing solutions to biodiversity loss as well as investing in ‘best-in-class’ companies.

Fidelity has defined these as market-leading companies in the space or companies developing new solutions to minimise biodiversity loss.

‘In the past, market participants have taken nature for granted, viewing this capital stock as a perpetual resource. But evidence shows that nature continues to degrade as a result of human activity,’ said Dimitrova.

‘The world is now waking up to the urgent threat to biodiversity and natural capital. Biodiversity investment solutions are emerging as the largest investment megatrend in our generation and provides opportunities for investors. 

‘The theme is at an inflection point, and belatedly transforming from a neglected risk into a top priority.’

The fund will invest across industries, regions and market capitalisations and 70 per cent of the fund’s net assets will be invested in companies with sustainable characteristics.

According to its key investor information document, it carries a five risk rating out of seven and an ongoing annual charge of 0.91 per cent, with no entry or exit fee.

The launch of the fund comes amid interest among investors in areas which cover priorities like the environment, sustainable infrastructure and health.

A number of funds are tapping into renewable energy, which is undergoing mass adoption and is particularly pertinent in the current energy crisis.

Earlier this month Fidelity launched its own new thematic ETF range consisting of five new products including clean energy and electric vehicles and future transportation.

Could big picture trends help you profit?

Investors trying to think long term in volatile times can find a vast array 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 investing and what are the big ideas that you could back? 

This is Money recently looked at what investors should consider before risking their money in any kind of thematic fund, and which big developments might offer the most richest opportunities over the next few decades. 

Thematic investing really gives people something to get their teeth into and can be easy to understand, according to Juliet Schooling Latter, research director of FundCalibre.

‘There is also a reasonable choice. For example, there are a number of exciting themes that could lead to a very different world in the next decade – climate change and decarbonisation, the rise of electric and autonomous vehicles, cloud computing, cryptocurrencies and delivery drones to name a few.’

But she warns 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 takes many years to start to come to fruition.

Investing experts also suggest funds and trusts giving exposure to some of the most exciting trends. 

> Read: Which big theme investments will make money in the next 20 years?