Interest in clean energy and green technology investing has dramatically increased, despite the fact that stocks of such companies have been pummeled this year, according to a new survey by the Social Investment Forum.
All of the 14 SIF members who responded said demand from clients for such investments is up this year. Currently, they collectively offer 17 mutual funds or other investments that focus exclusively on clean energy or green tech investing. Based on the survey, ten or more new such investment vehicles-including mutual funds, ETFs or indexes-might be introduced before the end of 2009, SIF concluded.
At a press conference Thursday on the survey results, participants acknowledged the pressure from the financial crisis but remained optimistic. "Clean energy stocks have been crushed this year despite the fact that revenues and profits are growing rapidly. However, we believe that despite the increased risks associated with the credit crisis, the fundamentals of these firms are so strong that they will find necessary financing to continue rapid growth," commented Adam Seitchik, lead portfolio manager of the Green Century Balanced Fund and chief investment officer of Trillium Asset Management in Boston, Mass. "Among solar stocks we follow, revenues are likely to rise between 60% and 140% this year and between 45% and 200% next year, and most of the companies are now solidly profitable. Plunging stock prices have improved their valuations dramatically to between 10 and 20 times earnings."
Jack Robinson, president of Winslow Management Co. in Boston and portfolio manager of the Winslow Green Growth Fund, said he expected investment in clean energy to continue even though the price of oil has fallen to around $70 a barrel. "Historically the companies we've invested in and talked with have set a hurdle rate of $50 a barrel," he said.
Seitchik said stocks of clean energy companies tend to be more volatile and some will have problems getting credit in the current environment. "You have to invest in companies that are already profitable and have good prospects for growth. They will get financing," he said.
He and other participants agreed that the recent bailout act signed into law includes energy tax credits that will make solar and other clean energy choices more affordable.
Bennett Freeman, senior vice president for social research and policy at Calvert mutual funds in Bethesda, Md., commented both candidates for president have indicated their support for clean energy initiatives, so the expectation is that the next president will sign legislation to help these efforts.
Freeman and Sietchik agreed participation by
institutional investors in the Investor Network on Climate Risk is
helping to raise awareness of clean technology investments among
mainstream retail investors. INCR is a $7 trillion network of primarily
institutional investors that promotes better understanding of the
financial risks and opportunities from climate change.