Climate change can pose big risks to real estate investments

When Vert Asset Management asked financial advisors what asset class in sustainable investing hadn’t gotten enough attention from asset managers, one of the top answers was real estate.

In 2017, the company launched a mutual fund — Vert Global Sustainable Real Estate Inst — focused on ESG real estate investments.

“We choose the REITs that are most committed to sustainability out of all the publicly listed REITs in the world, and then we buy and hold them,” Adams said.

The qualities Vert is looking for include efforts to reduce greenhouse gas emissions, good corporate governance and green building certifications, among others.

The company screens out REITs that have ties to the fossil fuel industry or prisons. It also scores REITS based on how well they are adapting to risks like rising sea levels, floods, heat and water stresses, and hurricane risks.

“We want to own the REITs that are aware of those risks and are taking steps to address them in their portfolio,” Adams said.

Vert is predominantly working with financial advisors, according to Adams. But individual investors can also access the funds through firms like Charles Schwab, Fidelity and TD Ameritrade.

At $23.4 million in total assets, the fund is relatively small. But its strategy has been getting noticed by professionals in the industry.

That includes John Gugle, who serves as chief investment officer and business development manager at Alpha Financial Advisors, an independent fee-only investment management firm that is starting to integrate more ESG strategies for its clients.

Gugle saw Adams speak at an April industry event, he said, and was impressed with Adams’ vision of global sustainability. Gugle’s firm hasn’t integrated the fund into its lineup at this point. However, it could be helpful in the event they want to swap out a more traditional real estate fund for an ESG-minded client, Gugle said.

Gugle said he sees Vert’s fund as part of a bigger wave of ESG products that will come to market.

“If you’re an investor wanting this, be patient. It’s coming,” Gugle said. “There’s more companies doing it. It used to be more of a boutique thing. I think it’s going mainstream now.”

This content was originally published here.

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