The Growth of Green Investing and the VanEck Green Infrastructure ETF – Nasdaq Trade Talks

Jill Malandrino: Welcome to NASDAQ trade talks. I'm Jill Malandrino, global markets reporter at NASDAQ. Joining us for the segment, we have Nick Frasse product manager at VanEck to discuss the growth in green investing and an ETF that gets you exposure to the space.

Nick. It's great to have you with us. Welcome to trade talks.

Nick Frasse: Thanks for having me. I appreciate it.

Jill Malandrino: You got it. Green investing just continues to get more spoken about within the investing communities. How is VanEck approaching the space?

Nick Frasse: Yeah, for sure. So green investing has definitely become a more popular investment asset class in the last five years or so as a firm, we try to marry our forward-looking intelligently designed, go to market strategy for ETF with what we believe our long-term strategic trends.

We definitely are in the camp that green investing absolutely falls into this long-term strategic trend category. Between the shift and demand for things like electric vehicles, alternative energy along with recent legislation that incentivize corporate investment in the space. We believe there's an opportunity for investors to access the space in a lot of different ways.

Jill Malandrino: Alternative energy seems to be one of the Hallmark topics in the green investing space. Would you guys agree?

Nick Frasse: Yeah, absolutely. Green energy has really kind of led the charge as far as themes go, with global net zero 2050 goal to be carbon neutral.

The biggest role is how do we as a society power the lives we lead in a more sustainable way, right? So this creates a lot of investment opportunity across alternative energy companies, but more importantly, companies downstream that are helping create the infrastructure that will make this energy transition scalable.

Ultimately, scalability is the biggest hurdle as we work to become more sustainable as a society. There's a lot of “green solutions” out there for many aspects of everyday life, but making them cost effective and attainable for everyone is really where the infrastructure argument comes into play.

Jill Malandrino: And VanEck recently launched its green infrastructure ETF (ticker RNEW). What was the investment thesis for this solution?

Nick Frasse: Yeah, so for renew, we tried to put together an investment methodology that outlines seven specific sub themes targeting U.S. companies that we believe will play a pivotal role in the transition to a more sustainable society.

These sub themes are green energy, green fuel, transportation, waste, construction, pollution control, and infrastructure equipment. Our goal with RNEW is really to give investors access to a diversified set of us companies within the green equity space that are going to create the building blocks for this net zero future.

Jill Malandrino: U.S. only is a differentiated approach. What was the rationale behind that?

Nick Frasse: It's definitely unique versus the peer group for green equity ETFs. It really boils down to what we believe are two key points for the opportunity set. The first is the United States is still a world leader in developing new cutting-edge technologies.

This is going to be imperative when we look at how we capture that scalability we talked about earlier. Creating a foundation for this new green future is going to take an immense amount of innovation across all of our outlined sub themes.

Therefore, we think the biggest opportunity set is within the United States. Secondly, on a global stage, the U.S. has lagged in terms of sustainable policy by and large. We've always been a part of those talks around sustainable change. But Europe, for instance, has been ahead of the United States in terms of societal and institutional acceptance of making the change.

Having said that the U.S. has one of the first to put pen to paper and introduce major legislation around investment in sustainability. The Inflation Reduction Act should prove to be a powerful catalyst for the growth among many of the sectors in the green space and prove to be beneficial to all parts of the supply chain, including the infrastructure they're built on.

Jill Malandrino: So why should investors consider green infrastructure?

Nick Frasse: In a nutshell, we believe the green investing trend is a long term strategic opportunity that makes sense for investors looking to access the space. The energy transition and the goal to become carbon neutral is going to create opportunity to invest in companies domestically that are driving these changes. By investing in a product, like RNEW our green infrastructure ETF investors are able to access a diversified set of businesses, creating the building blocks for this more sustainable future.

Jill Malandrino: All right, Nick, we appreciate the insight. Thanks for joining us on trade talks. I'm Jill Malandrino Global Markets reports at NASDAQ.