Renewables theme gets a tailwind

Added 1st December 2015

Progress with renewable technologies and the inclusion of climate change on the global political agenda have put the sector in the investment spotlight.

Renewables theme gets a tailwind

World leaders from 150 countries have gathered in Paris for an annual global climate conference known as COP 21, which began yesterday. They will focus on a binding agreement to lower carbon emissions and slow down global warming. 

Henderson Global Investors expects the summit leaders to highlight that the transition to a low carbon economy has shown significant cost benefits and is already well underway.

The firm said that alternative fuels, such as solar, can compete with fossil fuels on an unsubsidised basis.

“It is not just solar. In the last few years, there has been significant progress in battery technology such that fully electric cars and low cost energy storage are becoming attractive propositions,” the firm said.

Renewables funds

The combination of technology advances, the global political agenda and falling costs for renewables can only help attract attention to funds that invest in renewables and clean energy-related companies.

"Solar stocks contributed positively to the fund’s performance as share prices started to recover with the release of quarterly results."

There are less than a dozen with exclusive focus on those themes that are available in Asia. For example, the Henderson Global Care Fund, which seeks to "invest in companies that are thinking strategically about environmental and social changes". 

Another product, the Guinness Alternative Energy Fund, has noted in a recent disclosure that its solar holdings are performing well on the back of strong demand.

"The solar sector continued to make progress, with strong demand coming from China, the US and India," wrote Edward Guinness, portfolio manager. "The Chinese government announced an increased target of 17 gigawatt of solar installations in China for 2015, which we believe may be exceeded."

Philippe Zaouati, head of Mirova (the responsible investment division of Natixis Asset Management), said private capital will be the main driver of the global transition to renewables. 

"The success of COP 21 therefore also depends on the ability of asset management firms to propose solutions in response to the climate challenge, whilst delivering the returns expected by investors," Zaouati said. 

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A sampling of some clean energy-related funds vs the FTSE World Alternative Energy Index over the trailing three years:

 

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