The World's #1 Renewable Energy Network for News, Information, and Companies.

Alternative Energy and Climate Change Mutual Funds, Part IV

So far in this series I've concentrated on trying to pick the best of the Alternative Energy and Climate Change Mutual Funds. This is a difficult task, because while I found in Part III that most of the funds' performance has been better than comparable index ETFs, these mutual funds' costs are quite high, even by the standards of most mutual funds, as I discussed in Part I.

In part II, I tried looking at the sector breakdown of the funds' holdings, to see if I could explain some of their performance that way.  It turns out that funds that buy the most solar stocks have underperformed in the past. 

The underperfomance of solar-heavy funds confirms one of the principles of alternative energy sector selection that arise from common misunderstandings about how Alternative will re-shape our economy.  I went into them in more detail in part II, but in short they are:

  1. Underweight Solar
  2. Overweight biomass producers compared to their customers, biofuel producers.
  3. Focus on Energy Efficiency and Conservation.
  4. Invest in the Electric Grid.
  5. Favor Alternative Transport over the personal car.

What follows is my attempt to build a portfolio from the stocks owned by these mutual funds, but conforming to the principles above.

Fund Holdings: Solar Stocks

Many of the funds own large quantities of First Solar Inc (FSLR)SMA Solar Technology (S92.DE)MEMC Electronic Materials (WFR), and JA Solar Holdings (JASO).  First Solar is the largest holding of these mutual funds overall, accounting for 6.6% of the Winslow Green Growth Fund (WGGFX).  Overall, the average fund is about 24% allocated to solar, something I hope to improve on by leaving them out of the portfolio I'm building.

Fund Holdings: Biomass

By far the largest holding biomass holding in these companies is Sino-Forest Corp. (TRE.TO), a commercial forest plantation operator in China.  The second largest holding is Deltic Timber Corp. (DEL), but it's only held by one fund, the DWS Climate Change Fund Class S (WRMSX).  I'm looking for stocks held by at least two funds for this portfolio.

Fund Holdings: Energy Efficiency and Conservation

The top energy efficiency holding is also my personal favorite, Waterfurance Renewable Energy (WFI.TO), a manufacturer of Geothermal Heat Pumps.  Also held in quantity areRubicon Technology (RBCN), which sells mono-crystalline sapphire and other crystals to the Light Emitting Diode (LED) industry, and LED industry leader Cree Inc (CREE).  In conservation, we have water system repair firm Pure Technologies Ltd. (PUR.V).

Fund Holdings: Electric Grid

The top electric grid holdings were meter-maker Itron (ITRI), and transmission contractorQuanta Services Inc (PWR), both of which I've written about in these pages.  

Fund Holdings: Alternative Transport

These funds are more focused on Climate Change than peak oil, so alternative transport stocks are few and far between, but one that's owned by three funds is Smart Grid and Smart Transport stock Telvent Git S.A. (TLVT).  In order to get a little more representation in this sector, I'm also going to include rail supply company Wabtec Corporation (WAB), even though it's owned by only one fund, WGGFX.

Green Energy Portfolio

This is my suggestion of a portfolio, which should perform better than most of the green energy mutual funds because of better sector selection and lower costs: TRE.TO, WFI.TO, RBCN, CREE, PUR.V, ITRI, PWR, TLVT, and WAB, equally weighted.  That's 11% Biomass, 45% Efficiency and Conservation, 27% Electric Grid, and 17% Alternative Transportation.  It's not representative of the market, but we're trying to beat the market here, not just match it.

I'll take a look back at this portfolio next year to document how it has performed relative to the mutual funds.

DISCLOSURE: Long PUR.V, WFI.TO, PWR.

DISCLAIMER: The information and trades provided here are for informational purposes only and are not a solicitation to buy or sell any of these securities. Investing involves substantial risk and you should evaluate your own risk levels before you make any investment. Past results are not an indication of future performance. Please take the time to read the full disclaimer here.

RELATED ARTICLES

Electric Vehicle

Tesla E-motorcycles Complement SolarCity Microgrids

Mahesh Bhave, Contributor Batteries are the renewed focus of attention given the launch of Tesla’s PowerWall on April 30. What or where might the next major application be? Utility scale storage appears to be one. My thesis is that launching Tesla e...
Canadian Climate Goals

Canada Announces Weak Climate Target

Danielle Droitsch, NRDC Last week, Canada has announced its contribution to the global effort to reduce greenhouse gases by announcing its post-2020 target. The target announced today is off-track to the 80 percent cut by 2050 they committed to in...
Renewable Energy Stocks

What Drives Alternative Energy Stocks?

Harris Roen, The Roen Financial Report Alternative energy became a serious market player after the turn of the millennium. Since that time, solar, wind, smart grid and other alternative energy stocks have experienced both strong up and down trends. The forces at...
Microgrids

Coast to Coast and Across the Electric System, Microgrids Provide Benefits to All

Dick Munson, Environmental Defense Fund At the most obvious level, microgrids could disrupt today’s utilities and their regulated-monopoly business model, because they challenge the centralized paradigm. In a nutshell, microgrids are localized power grids that ha...
Tom Konrad is a private money manager and freelance writer focused on Peak Oil and Climate Change as investment themes. He manages portfolios for individual clients and is Head of Research for the JPS Green Economy Fund (http://jpsgreeneconomyfund...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 3
1505REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in Brazil – in partnership with GWEC, the Global Win...

Brazil is one of the most promising markets for wind energy.  Ranke...

EU PVSEC 2015 (European PV Solar Energy Conference and Exhibition)

The EU PVSEC is the largest international Conference for Photovoltaic re...

Using Grid data analytics to protect revenue, reduce network losses...

COMPANY BLOGS

EU PVSEC 2014 extends its Scope

Added focus on application and policy topicsAbstracts for conference con...

Teun Bokhoven, President of the Dutch Renewable Energy Federation, ...

Munich, 08 April 2014 – The 29th European Photovoltaic Solar Energ...

EU PVSEC 2014: Call for Papers Receives Great Response

More than 1,500 contributions apply for presentation in AmsterdamScienti...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS