The Sunday Times - May 07 - Ilija Murisic - Weather Derivatives - UBS Global Warming Index
May 27, 2007
How to proﬁt from global warming
A new index lets you make money from rising temperatures, but
it’s not the only way that you can climb on the green bandwagon
INVESTORS are being offered the chance to proﬁt
from climate change with the launch of an index
that lets you bet on rising global temperatures.
The UBS Global Warming index will initially track
temperature variations in 15 American cities,
making so-called “weather futures” available to
ordinary investors for the ﬁrst time. They have long
been used by the likes of agricultural ﬁrms to hedge
against bad weather.
Investors will be able to bet on the index using
certiﬁcates, which are essentially like tracker funds,
and warrants, a type of option on the index
available via UBS’s private bank.
The launch seeks to take advantage of the growing
mania for “green” investment, which has seen
alternative energy stocks such as wave and wind
power generators leap by 300% over the past three
years, according to ABN Amro, an investment
These returns have led some commentators to liken
green energy companies to the technology bubble,
especially as Silicon Valley entrepreneurs who set
up tech ﬁrms back in the 1990s are now moving
into renewable energy stocks.
However, City analysts say that over the long term
the potential is huge. Ian Richards of ABN Amro
said: “There has been a surge in eco-awareness over
the past 12 months and the appetite for change has
never been greater. The direction of government
policy is clear and should result in investment
The government’s white paper on energy,
published last week, made a number of
recommendations – including the tripling of
electricity from renewable sources by 2015 and
increasing the use of nuclear power.
The European Investment Bank also sought to get
in on the act last week with the launch of the Pan-
European Climate Awareness Bond, which will be
available from Tuesday from high-street banks and
The bond, issued in tranches of !100 (£68) each,
offers a minimum return of 105% of your
investment at maturity in June 2012, while helping
to fund climate projects.
Here we offer some other ways to proﬁt from
Uranium As part of the energy white paper, the
government gave the go-ahead for a new
generation of nuclear power plants, so fund
managers have been increasing their holdings in
uranium, nuclear’sraw material.
Ian Henderson, manager of the £1.1 billion JP
Morgan Natural Resources fund, has just increased
his holdings in uranium companies to 7%,
including SXR Uranium One and Ur Asia.
Henderson said: “Just a few years ago we wouldn’t
have touched uranium but now we can see a clear
market demand and short supply.