Alternative Energy Funds Have Experienced Ups And Downs
In the credit crunch and finance crisis of 2008 that culminated with a mini-crash on October 10th, stock markets experienced large down swings resulting in diminishing share prices across all sectors.
Among those hit hard were alternative energy mutual funds and stocks, as well as traditional energy stocks like Chevron or Hess. The difference is that in the latest quarter of 2010 (and early 2011), many of the traditional stocks have risen back to their pre-crash levels, but the alternative energy stocks remain depressed.
A Bright Future For Alternative Energy
But many people think that alternative fuels represent the wave of the future. The reasons are relatively simple. Financial analysts and economic scholars think that oil prices will inevitably rise, due not only to decreasing yield and falling number of newly discovered oil wells, but also occasionally exacerbated by incidental wars and other violent, chaotic conflicts especially in the Middle East. To some extent, oil will be replaced by nuclear energy, considered to be "less alternative" or less clean than solar, geothermal, hydroelectric, wind, natural gas and biofuels (which includes ethanol). Furthermore, many technologies are experiencing new breakthroughs, from products like genetically engineered algae to new solar panel materials. These will go a long way toward countering the traditional bane of alternative energy, high cost and difficulty in scalability.
Five Big Funds
Below we list five of the most notable alternative energy mutual funds with one caveat. The first one listed is New Alternatives, one of the oldest funds with excellent returns. But one key fact to remember about New Alternatives is that it is not strictly an energy fund. They have assets in other sectors, all of which they deem environmentally conscious or sustainable, but not necessarily related to energy.
Symbol: NALFX
Recent Performance: 1 yr return as of April 2011: 13.35%
Fee: 1.04% (low)
Total assets: $260.9 million
Character: Mid cap, value to growth holdings
Top holding: Edf Energies Nouvelles
Propectus excerpt: "The fund invests most of its assets in companies that provide a contribution to a clean and sustainable environment. It usually invests at least 25% of assets in common shares of companies which have an interest in alternative energy."
Symbol: GAAEX
Recent Performance: 1 yr return as of April 2011: 2.00%
Fee: 1.73%
Total assets: $44.8 million
Small to mid cap, value to growth
Top holding: Renewable Energy Corporation ASA
Prospectus: "The investment seeks long-term capital appreciation. The fund normally invests at least 80% of assets in equity securities of (both U.S. and non-U.S.) companies involved in the alternative energy or energy technology sectors."
Symbol: LGCTX
Recent Performance: 1 yr return as of April 2011: 13.29%
Fee: 1.84%
Total assets: $32.8 million
Small to mid cap, value to growth
Top holding: ADA-ES Inc
Prospectus excerpt: "The fund allocates its investments primarily in common stocks around the world that benefits from the expected growth in spending and investment in energy efficient and “clean” technologies, innovations and solutions. It invests in four clean technology groups including: 'Alternative Energy,' 'Resource Conservation,' 'Clean Water,' and 'Clean Environment.'"
Symbol: CGAEX
Recent Performance: 1 yr return as of April 2011: -0.66%
Fee: 1.85%
Total assets: $191.4 million
Small to large cap, value to growth - tilting towards mid-blend
Top holding: Iberdrola Energias Renovables SA
Prospectus excerpt: "The fund invests 80% of net assets (including borrowings for investment purposes) in equity securities of U.S. and non-U.S. companies whose main business is alternative energy or is significantly involved in the alternative energy sector. It invests in securities of all market capitalizations. The fund has sustainable and socially responsible investment criteria that reflect specific types of companies in which the fund seeks to invest and seeks to avoid investing."
Symbol: ALTEX
Recent Performance: 1 yr return as of April 2011: 1.15%
Fee: 1.98%
Total assets: $6.3 million
Small to large cap, value to growth
Top holding: JA Solar Holdings Co LTD (9%)
Prospectus excerpt: "The fund normally invests at least 80% of assets in alternative energy and energy technology companies, both U.S. and international."