Green Mutual Funds

Green Mutual Funds

Together with growing environmental concerns and massive rises in oil prices, there is an increasing trend towards support for eco friendly products in all spheres, including mutual funds. Mutual funds are «going green» and looking at investing in companies that are seeking to develop renewable energy resources.

These Green funds have had a phenomenal early run particularly for companies that are manufacturing products that reduce our dependence on carbon-based fuels. As green investors place more faith in small yet volatile companies they are seeing large upward trends, but on the other hand the downs descend pretty rapidly and dramatically also. But either way this fast growing fund trend has seen a large amount of interest and new green funds have been launching at quite an incredible rate over the past couple of years.

While not everyone is sold on this new niche of the mutual fund market and some people could care less about environmentalism, it is hard to argue against some of the returns produce by mutual funds investing in this marketplace. For instance the Allianz RCM Global EcoTrends Fund (AECOX). This green fund of $131 million has been appearing in the top 10% of stock funds in this year alone, outperforming the S&P 500 during the same period and since its inception is up by 19.3%.

This is not the only green mutual fund producing good returns; it is quite simply more diversified than many of its counterparts. It invests in many different areas such as clean water, hybrid vehicles, pollution control, desalination plants, in fact the entire gamut of eco-friendly companies.

The Calvert Global Alternative Energy Fund, (CGAEX) is another example. This mutual fund company only invests in alternative energy companies, it was first launched in 2007 and is managed by the head of KBC Asset Management, Jens peers. He is based in Ireland and has a full understanding of politics and legislation on both the US and Europe. The reason why this is of particular importance is because governments play a large role in deciding what alternative energy supply companies the wish to subsidize. This is able to significantly impact upon these companies. Currently Gamesa and Vestas are the two leading wind turbine manufacturers and are part of the (CGAEX) portfolio. As this fund was only launched in May of last year, it does not yet have much of a performance history yet.

The WGGFX or Winslow Green Growth Fund has been a good performer; this fund was launched in 2001 and has grown in five years at an average of 25%. The main selling point of this green fund is the fund managers, Matthew Patsky and Jack Robinson who have been engaged in green investing for some years now. Both these gentlemen have between them a huge wealth of knowledge in the area of green investing. The fund invests mostly in small-cap stocks and the expense ratio might appear high at 1.45%, but this is actually on the low end for a vigorously managed mutual fund such as this.

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