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Alternative Energy Outperforms All Other Sectors in September

Alternative energy mutual funds (MF) racked up extremely robust gains in the past year. Returns range from a low of 16 percent, to a high of 64 percent for a mutual fund that is heavy into solar investments. Exchange traded funds (ETF) also did well, but returns are much more variable. They range from a loss of 34 percent for a carbon ETF, to more than doubling of a solar ETF.

MF_20130930

Mutual Funds

Returns remain excellent for alternative energy MFs overall, with average mutual fund up 32.3 percent for the year. Not a single fund posted a loss in the past 12 months. All mutual funds are also up for three-month and one-month time periods.

The best performing mutual fund over several time frames (12-month, three-month, one-month and one-week) is Guinness Atkinson Alternative Energy (GAAEX), up over 64 percent for the year. This fund is strongly invested in solar, with top weighted holdings that include SunPower Corp (SPWR), JA Solar (JASO), ReneSola (SOL) and other solar winners.

ETF_20130930Exchange Traded Funds

Performance of alternative energy ETFs are better for the year than their mutual fund counterparts, up 36.1 percent on average. There is a wider range of returns, though, with three out of the 17 ETFs posting double-digit losses.

The best returning ETF is Guggenheim Solar (TAN), up an astounding 113.5 percent for the year! Though this solar ETF is trading at its best levels in over a year and a half, it is still far below levels it was trading at in the heady solar days of 2008. This suggests that the climb for this fund could continue far past current levels.

Alternative Energy versus Other Sectors

Compared to other sectors of the economy, alternative energy mutual funds and ETFs have outperformed extremely well. According to Morningstar®, sectors on average returned 24 percent, far below annual returns for MFs and ETFs. It is interesting to note that alternative energy mutual funds and ETFs did much better than the volatile energy sector as a whole (four to five times better in fact).

 sector_year

 
Monthly returns show even better comparative results. Alternative energy MFs and ETFs beat all the sectors without exception. Comparing the average of all sectors, mutual funds performed almost twice as well, and ETFs almost three times better.
 

sector_month

 
The easy money may have been made in September, led by extremely strong returns in solar. However, I still believe the mindful alternative energy investor is likely to do well in the long term.

Disclosure: Individuals involved with the Roen Financial Report and Swiftwood Press LLC do not own or control shares of any companies mentioned in this article. It is also possible that individuals may own or control shares of one or more of the underlying securities contained in the Mutual Funds or Exchange Traded Funds mentioned in this article. Any advice and/or recommendations made in this article are of a general nature and are not to be considered specific investment advice. Individuals should seek advice from their investment professional before making any important financial decisions. See Terms of Use for more information.

This article was originally published on The Roen Report and was republished with permission.

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Harris Roen is President of Swiftwood Press LLC, publisher of the Roen Financial Report. Mr. Roen has a depth of expertise in the alternative energy arena, analyzing individual companies and alternative energy sectors to discern broader market tre...

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