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5 key alternative energy investment principles and matching mutual funds
Calling all socially aware investors! I have found out which mutual fund has applied what I consider 5 of the key alternative energy investment principles. Before we get to that though, and as a sidenote, the cheapest green energy mutual fund with the most generous cost assumptions will still cost you no less than 1% per year more than your average green ETF. It is, however, very difficult for mutual fund managers to beat the market, particularly by 1.5% per year. For this reason many people choose alternative energy investment ETFs above mutual funds, which are passively managed and low cost.
However, there are still many investors who prefer the active management of mutual funds, and for this reason I have researched into the green energy mutual funds to find the one that, in my opionion at least, is the most clued up about the alternative energy investment world.
The majority of investors still poorly understand the renewable energy sector. A large number of people in the US still think that climate change is a folly, and know nothing about peak oil. On the other side of the coin, there are believers who think that fossil fuels can make way for alternative energy without us changing out lifestyle.
The alternative energy investment manager who has a deep awareness and understanding of how the economy must adapt is the one who will outperform the investors who think that there is no problem, as well as the investors who think that electric cars or solar panels will save the world.
Here are 5 key alternative energy principles that I feel investment managers need to consider:
1 – With wind and solar energy on the rise, we need a much more advanced electric grid.
2 – The production of biofuel is a commodity business, and the owners of feedstock are the ones who look set to make it big, as apposed to the producers of the biofuel
3 – With energy set to become more expensive, huge investments are going to be made in energy efficiency and conservation.
4 – The price of fuel (and batteries) will lead to a move from the car to alternative transportation solutions.
5 – Solar will be big in about 3 decades, but the solar stocks of today will not benefit from this.
This all means that a knowledgable green mutual fund manager will have a large part of the funds invested in biomass and energy efficiency stocks, as well as the electic grid and alternative transportation. So is there a fund out there right now that is following these key principles? Well, a look at the holdings of all the green energy mutual funds with reasonable costs shows that Winslow Green Growth Fund has applied these principles to the greatest degree.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.