Alternative energy investors not seeing green yet" is an article that looks to mutual fund investors who have not yet seen a pay off from their investments in clean energy:
The stocks of renewable energy companies, such as wind and solar power providers, have been big losers. The Clean Edge Global Wind Energy Index, which tracks wind energy stocks, is down about 27 percent over the last 12 months.
That disappointment came as oil company stocks and the Standard & Poor's 500 stock index both surged about 20 percent.
If his goal is to be realized, Obama and his successors will have to stick with the programs he embraced early in his presidency to support wind and solar. The government may even have to raise its commitment, likely through new subsidies that could create further opportunities for green investors.
Either way, Obama's speech offered comfort to investors left wondering how long to stick with it.
"The sector is not much loved at the moment," concedes Edward Guinness, co-manager of the Guinness Atkinson Alternative Energy Fund (GAAEX).
With a nearly 22 percent loss in 2010, the fund finished last among 83 funds specializing in energy stocks, according to Morningstar. The $38 million portfolio was weighed down by solar and wind energy stocks, most of which fared poorly last year. One of its biggest holdings, SunPower Corp., fell 46 percent.
Meanwhile, another Guinness Atkinson fund, Global Energy, posted a nearly 17 percent return last year, thanks to gains for the oil and gas company stocks it holds. They benefited from an economic recovery in a world still hooked on fossil fuels.
Meanwhile, solar and wind energy stocks have recently hit several obstacles:
- Several European governments face huge deficits that could jeopardize their traditionally strong support for alternative energy subsidies. Spain and Italy have already reduced their backing, and wind and solar stocks have been hurt by fears that more such cuts are coming.
"That has been this huge ax sort of hanging over the alternative energy industry, keeping everyone cautious," Guinness says.
- Recently low natural gas prices have reduced the incentive to convert to solar or wind.
- A recent rise in oil prices hasn't yet been enough to translate to significantly higher costs for electricity generated from burning fossil fuels, Guinness says.
Still, investors in wind and solar energy stocks may benefit over the long haul, if they've stuck with it this far.
Volatility is one reason why Morningstar analyst David Kathman advises most investors keep no more than 5 percent of their portfolios in alternative energy stocks or funds.
The hope is that over the long haul — meaning several years — there's more up than down for the stocks. Guinness figures a shift could come soon: "I'm hoping to see decent gains in the next 18 months. And in our mind, that is short-term."
The article offers some positive and negative stories and tips in the body of the article, and it is worth a read.
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