Everyone wants to know where to put their money in order to make it grow. This article offered advice to those who want to invest in renewable energy mutual funds.
By: Harris Roen, Roen Financial Report
Published: January 09, 2013
2012 was a good year for alternative energy mutual funds. On average all funds returned over 9% for the year, with over half the funds posting gains of 15% or better. The best performing funds were Allianz RCM Global Water (AWTAX) and Pax World Global Environmental Markets (PGRNX). Both had annual returns in the 20% range.
These two best performing funds for the year have also dropped one notch from their Rank 1 status (see rankings here). The fund that declined most in rank was Calvert Global Alternative Energy A (CGAEX), which now rests at a Rank 5. This drop is accredited to shortcomings in the mechanics of the fund, including its high expense ratio relative to the other alternative energy mutual funds, and a low “Alpha” (essentially a measure of the value a fund's manager brings to the portfolio).
It is interesting to note that the funds which performed the worst for the year overall, Guinness Atkinson Alternative Energy (GAAEX) and Firsthand Alternative Energy (ALTEX), also performed best in the past month. This goes to show that chasing performance, especially on mutual funds, is usually not the best way to pick an investment. A much better approach is to look at multiple criteria in order to determine the fund most likely to have good returns going forward.