As we ponder 2008 resolutions under the shade of our volatile US economy, it might be prudent to consider alternative energy investments as part of re-balancing our portfolios. While the topic of ‘green’ continues to dominate the headlines, it is a good time to put ‘your money where the green is.’
According to a United Nations report in 2006 investors poured in $71 billion into companies in various fields of renewable energy and energy-efficiency technologies. Experts predict that it will rise to $85 billion this year.
While there was a rush to alternative energy investments during the oil crisis in the 1970s and tech bubble in the 1990s, the current sentiment is that these are here to stay – owing to the rising demand for power, concerns about oil resources, and climate change. Renewable sources today only produce only 2% of the world’s energy, but account for 18% of world investment in power generation. The rising popularity of alternative energy technologies and capacity will attract venture capital funding, legislative incentives and business support. Developments of note:
The European Union is mandating that 20% of energy use comes from solar, wind and other renewable sources by 2020
The U.S. House of Representatives passed an energy bill mandating that 15% of electricity from private utilities be generated from renewables by the same time
Governments are providing subsidies, incentives and tax breaks to speed up the development of alternative energy technologies
General Motors announced that 50% of its vehicles will use alternatives to gasoline within the next five years
You know that when Wall Street rises to the occasion, it is to be taken seriously. Several new exchanged traded funds have been launched to invest in alternative energy companies, as well as a new crop of mutual funds. These include a combination of ‘pure plays’ and ‘market leaders.’
Since the start of the year, this small but growing pool of funds have posted solid returns, and in many cases outperforming the S&P 500. Of note:
- New Alternatives Fund (NALFX)
- Guinness Atkinson Alternative Energy Fund (GAAEX)
There’s still time for a green shopping spree………………….