Renewable Energy Mutual Funds 101: Investing and performance measurement
The renewable energy market is growing steadily, and it is getting a lot of attention from investors. As you are reading this then you are one of many people right now looking to put renewable energy into their portfolio!
This industry as a whole is currently receiving a huge amount of capital via a number of investment tools, such as initial public offerings, private investment initiatives, and government funding. Companies dealing with various types of renewable energy like solar, wind, geothermal, tidal, and biomass are seeking to raise capital to fund new inventions and initiatives. Renewable energy mutual funds are a great way to participate in the promotion of clean energy and receive a long-term substantial return on your investment while you are at it.
This has many people wondering about how to invest in mutual funds dealing with renewable energy. There are a variety of renewable energy mutual funds in existence, which tend to attract savvy investors, since it is obvious that the companies involved are look set to grow way faster than the market average. The mutual funds invest carefully in a number of renewable energy companies, diversified along the entire renewable energy sector. These companies show excellent potential for growth and strong performance on the market.
The first point in how to invest in mutual funds in the renewable energy sector is that you’ll need to review the index of this sector in order to decide on the best mutual fund to invest in. It is possible to find the index of the renewable energy sector if you monitor the Dow Jones regularly, where individual company stocks can be tracked. There are other investment gurus you can check out, like Ludlow, Ardour, and Credit Suisse. All of these indexes judge the renewable energy companies’ market performance and profit, which is related directly to the overall performance of mutual fund.
The following two renewable energy mutual funds have been around for a long time and are considered solid:
1 – The New Alternatives Fund. It started in 1982 with investments in companies that dealt with sources of alternative energy, as well as those dealing with environmental protection and conservation of energy.
2 – Guinness Atkinson Global Energy Fund Review. This one started in 2006 and has the symbol GAAEX. This mutual fund focuses its investments in companies that receive over half their revenue from renewable energy.
To measure any mutual fund’s performance, it should be compared against a benchmark index. When it comes to the renewable energy mutual funds, the Alternative Energy Index should be used. This index includes environmental technologies (called ‘cleantech’ sometimes), renewable energy in general, and alternative and transitional fuels like natural gas and nuclear power. Apart from that, you may also check the Dow Jones (as mentioned above) to find the World Alternative Energy Index. This index tracks the 20 largest renewable energy stocks in the world according to performance, efficiency, and distributed energy.
Renewable energy mutual funds are a great way to invest in the future energy needs of the world. Apply the advice given above, continue your research, and you will be in a good position to come out of it on top!
For more information on mutual funds in general, go to:
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.
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17 Jan 2011