Investing in alternative energy funds is one way for investors to have a positive impact on the environment while supporting green technologies. According to recent data from Chicago's HFR, the Alternative Energy index was up more than 47% in 2009, outperforming all other commodities throughout the year.
The areas of green investment to place focus on are renewable energy consisting of solar power, wind power, geothermal, hydropower and biomass. Other related areas to consider investing in are ocean energy, hydrogen, fuel cells and energy conservation.
The current uncertainty about the earth's future energy supply makes investing in renewable energy an attractive option, especially for long term investors. Fossil fuels are not renewable forms of energy, eventually they are going to run out. According to the BP Statistical Review of World Energy there is only enough oil left on earth to last for approximately 42 years at the world's current rate of consumption.
According to research by Clean Edge, a leading research firm that tracks and analyzes clean-tech markets and trends, production and wholesale pricing of biofuels such as ethanol and biodiesel reached $34.8 billion in 2008 and are projected to grow to $105.4 in 2018. Clean Edge also estimates that wind power will expand from $51.4 billion in 2008 to $139.1 billion in 2018, and solar power will grow from $29.6 billion in 2008 to $80.6 billion in 2018.
Tips on Choosing a Green Energy Stock
- Choosing a stock requires a certain amount of research to be done by the investor. Investors can check out green stocks with green profiles, including executive summaries, stock symbols, key executives and product information on a number of different websites. Look for websites that profile renewable energy stocks.
- Look for no load mutual fund options as they do not charge brokers fees. The Winslow Green Growth Fund, Calvert Global Energy Fund and New Alternatives Fund all offer no load options.
- Compare the risks and returns. Choose a renewable energy stock or mutual fund with an acceptable risk.
- Keep current on what is happening in the environmental finance sector. Both Green Money Journal and Environmental Finance magazine give investment tips and news on environment-related issues.
There is always a level of risk when investing in mutual funds due to circumstances that cannot be foreseen. Political priorities and environmental regulations may have an impact on alternative energy funds, so staying informed of these issues is an important factor to consider before investing.
Minka Gantenbein - Minka Gantenbein is a freelance journalist from the beautiful Central Coast of California. She has a Bachelor of Science degree in ...
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