Making Money Without Fossil Fuels

You might be curious to find out if it is possible to still make money if you divest from fossil fuels, and you’ll be pleased to discover that I made a fortune betting against fossil fuels!

OK, that’s not strictly true, a more accurate sentence would be “If I had invested £100k in 2010 in a fossil fuel free index instead of one with fossil fuels, I would have made £20k more in the last 9 years.”

That is true. I’ve done the maths.

For this example I have used the MSCI World Index vs the MSCI World Ex-Fossil Fuels.

The MSCI World Index is described as: “The MSCI World Index captures large and mid-cap representation across 23 Developed Market countries. With 1,607 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.”

And the MSCI World Ex-Fossil Fuels is described as: “The MSCI World ex Fossil Fuels Index is based on the MSCI World Index, its parent index, and includes large and mid-cap stocks across 23 Developed Market countries. The index represents the performance of the broad market while excluding companies that own oil, gas and coal reserves.”

Pretty straightforward and a fair comparison.

Here are the calculations using growth figures taken from MSCI.

https://www.msci.com/documents/10199/b4b02abd-f3a7-4a4b-b459-e996a672cd8f

Year With Fossil Fuels End of Year Ex-Fossil Fuels End of Year
100000.00 100000.00
2011 -1.84 98160.00 -2.05 97950.00
2012 14.75 112638.60 16.63 114239.09
2013 21.86 137261.40 23.55 141142.39
2014 20.14 164905.84 22.19 172461.89
2015 11.03 183094.96 13.33 195451.06
2016 11.39 203949.47 10.11 215211.16
2017 8.1 220469.38 8.8 234149.74
2018 -3.58 212576.58 -3.35 226305.72
2019 30.76 277965.13 31.81 298293.57
Difference: -20328.44 Difference: 20328.44

 

The returns from both are good but who wouldn’t want an extra £20,000!

Or if you’d started with £1M, an extra £200k.

I’m sure you could find ways to spend it!

At this point it is probably important to add that past performance is NOT an indicator of future performance. The value of investments may go down as well as up and is not guaranteed.

A lot can change, and it is already changing. The world is trying to transition to renewable energy and carbon neutral transportation.

Draw your own conclusions about the long-term effect that will have on fossil fuels.

And wont it be nice to have cleaner air & quieter roads?

If you are ready to make sensible, forward thinking decisions with your money, get in touch.