Alternative energy stocks are the best performing area for funds with socially responsible investme...
Alternative energy stocks are the best performing area for funds with socially responsible investment mandates, according to Luke Hickmore, ethical investment manager at Rathbones.
Hickmore says that since the end of March 2001 to 11 June, the alternative energy sector is up 50%.
Initially, there was a lot of concern within the sector following the appointment of George W Bush in the US, his pulling out of the Koyoto gas emissions agreement and his views on nuclear power, Hickmore says.
However, Bush made a speech on 17 May concerning the development of alternative energy that has given the sector some cause for optimism. Hickmore says Bush outlined proposals for giving tax credits at an estimated cost of $4bn for alternative energy research and for consumers who buy fuel-cell electric cars.
Hickmore says: 'These tax credits will influence the decisions of consumers in the future over which car they buy, fuel or fuel cell. Big car manufacturers like Ford and Nissan are supportive of the idea and have already signed deals with Ballard Power systems, a leader on cell development.'
Julia Dreblow, SRI development manager at Friends Provident, says that while there are many exciting technologies coming through, there are not many available on the stock market, as yet.
Dreblow says that while the group's Stewardship fund, which has been running for 17 years, does invest in Vestas, a Danish wind farm company, and Gamesa, a Spanish wind farm company, it is very hard for ethical funds to get access to a lot of these small companies currently.
Dreblow says: 'There are not yet many pure environmentally friendly companies on the market. However, when new legislation comes through we will see a shift towards the alternative energy companies and a greater demand for their products.'
Hickmore says the Merrill Lynch New Energy Technology trust, which focuses on wind-power, fuel-cell and other alternative energies, has been doing very well since March 2001.
Hickmore says that while alternative energy is performing well in the short term, in the long term, socially responsible real estate will be a strong performer.
Two companies in particular that are doing well, Hickmore says, are the Workspace Group and Unite. Workspace, a supporter of smaller businesses, is up 25% over one year to 11 June 2001 and Unite, which focuses on student and key worker accommodation, is up 110% over one year, he says.
Dreblow says the Stewardship fund only invests in building companies with good environmental practices, such as those that use environmentally friendly practices when building the houses, and companies that have a policy of building for low income families and the elderly, rather than high profit housing.
Waste management is another interesting area in the sector, according to Dreblow. She says the Waste Recycling Group, which runs landfill sites and burns off the waste methane gas for creating new energy, has done well recently.
Technology is not performing well and Hickmore says Rathbones has been very careful with exposure to this area.
Alternative energy sector up 50%.
New technologies coming through.
SRI real estate to do well long term.
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation