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FEATURE ARTICLE - MARCH/APRIL 2008
Clean Tech Investment
Opportunities on the Rise
With the climate crisis consistently making headlines, consumers, businesses, and investors are turning to clean-energy solutions as a way forward. Clean energy is becoming more widely available as an investment product, with investments growing rapidly every year.
Total investments in alternative energy in North America and Europe totaled $5.18 billion in 2007, a 44 percent rise from 2006, according to a report by The Cleantech Group, LLC. Green energy investments, also called “clean tech,” include investments in technology directly related to renewable energy (like solar panels), as well as companies that aid in the manufacturing and delivery of those technologies, and companies that work to conserve energy. The largest investments in the US and Europe in 2007 were in energy generation companies specializing in solar, wind, and biofuels; investors also put capital towards energy storage and transportation, energy efficiency, and recycling.
According to Clean Edge, a research firm specializing in alternative energy, annual revenue for four key clean-energy technologies—biofuels, wind power, solar power, and fuel cells—is projected to quadruple by 2016. And a survey of investors by socially responsible investing company Calver found that 85 percent of those surveyed see investments in alternative energy and as representing “a dual opportunity to support the environment and generate profit at the same time.”
There are plenty of opportunities for individual investors to invest and support clean technologies. A crop of new and seasoned mutual funds, exchange-traded funds, and index funds are available for your investments in clean tech industries. Before making any investments, make sure to request a prospectus and consult your financial advisor. To find a financial advisor who specializes in socially responsible investing, turn to Green America’s National Green Pages™.
The New Alternatives Fund (NALFX) has been investing in renewable energy since 1982. The Fund invests in wind, solar, energy efficiency, and fuel cells, among others, and does not invest in nuclear power. Investments begin at $2,500; IRA accounts begin at $2,000. Contact: New Alternatives Fund, 800/423-8383.
The Calvert Global Alternative Energy Fund (CGAEX), launched in May of 2007 by Calvert, one of the largest socially responsible mutual fund firms. Investments begin at $2,000. Contact: Calvert, 800/818-8397.
The Guinness Atkinson Alternative Energy Fund launched in March of 2006. Investments begin at $5,000; IRA accounts begin at $1,000. Contact: Guiness Atkinson Funds, 800/915-6566.
Exchange-traded funds, or ETFs, are funds that track an “index,” but can be traded like a stock. An index is a list of stocks assembled to track the performance of a market segment. The following ETFs track indexes of companies investing in clean technologies and green energy solutions:
PowerShares Capital Management, LLC sponsors a family of exchange-traded funds, three of which focus specifically on clean technologies.
The PowerShares CleanTech Portfolio (PZD) is based on the Cleantech Index™, launched in 2006, which tracks clean-tech companies ranging from those focused on green energy to air and water purification.
The PowerShares Progressive Energy Portfolio (PUW), launched in 2006, is based on the WilderHill Progressive Energy Index, which tracks companies that specialize in “transitional technologies” to reduce harm from fossil fuels, as well as companies involved in energy efficiency and renewable energy. Some companies focusing on nuclear power may be included in the index.
The PowerShares Clean Energy Portfolio (PBW), started in 2006, mirrors the performance of the WilderHill Clean Energy Index, which tracks businesses that will benefit from energy conservation and the use of renewable energy. Included in the index are solar and wind power, energy storage, and alternative fuel companies.Also, the First Trust NASDAQ® Clean Edge® US Liquid Series Index Fund (QCLN) was launched in 2007 to mirror the performance of the NASDAQ Clean Edge US Liquid Series Index (“liquid” here refers to stocks that can be bought and sold, not liquid fuels), which tracks the performance of companies that are primarily manufacturers, developers, distributors, or installers of clean-energy technologies.