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Published on April 22, 2008

Ki Nan Tsui

The Nation

Thomas Malthus (1766-1834) offered the theory of the planet's population growth ultimately being capped by available food supplies. Fund managers are now paying more attention to his work as grain prices surge to record levels.

Few have plucked right at its heart, however, exploiting the emotional side of climate change, as much as has UOB Asset Management Thailand (UOBAM), with one of its first funds in a long time.

A severe snowstorm in China, flooding in England and Ireland and drought in the northeastern US and much of Australia have all stemmed from climate change, said CEO Vana Bulbon.

UOBAM, which has given South Korean bonds a miss, becoming the only fund-management firm to do so, is more confident its climate-change-themed fund will become the next flavour of the moment.

Rather than invest in stocks, the UOB Select Global Warming 1 Fund will invest in structure notes from five issuers - European banks with ratings of "AA" or higher - that buy options or swap-link to the Citigroup Climate Change Index (CCCI).

Investors will make money only when the CCCI outperforms its benchmark Morgan Stanly Capital International (MSCI) World Index.

Vana said that so far, the CCCI had beaten its benchmark by 151 per cent since its inception on March 31. Although the fund does want to profit from climate change, it is not necessarily a "green" fund.

Forget small wind turbine makers like Denmark's Vestas. Companies in the CCCI portfolio are blue chips with at least US$500 million (Bt15.79 billion) worth of market capitalisation, such as Toyota, Gazprom and Suez.

The fund has a three-year tenure and protects its investors' principal investment, with a 1-per-cent subscription fee.

Vana said the only time investors would receive no additional returns was when the MSCI World Index outpaced the CCCI.