Obama's sustainable-energy ideas give hope to some fund managers

Tax breaks courtesy of Stabilization Act aim to bolster the sector

Nov 30, 2008 @ 12:01 am

By Andrew Coen

The election of Barack Obama has given a new "green" light to environmental investing, and financial advisers are taking notice.

During his campaign, Mr. Obama unveiled an aggressive energy plan aimed at decreasing America's dependence on foreign oil. His energy plan calls for a $150 billion investment in clean technologies over 10 years and programs to create renewable energy.

Mr. Obama's ambitious plan also involves trying to derive 10% of the country's electricity from renewable sources by 2012, and 25% by 2025.

"With the Obama administration beginning to form itself, I think there is great promise in [green-investing] sectors," said Steve Scheuth, president of Colorado Springs, Colo.-based First Affirmative Financial Network LLC, which manages $700 million in assets.

In addition to taking back the White House after eight years of Republican rule, the Democrats boosted their majorities in Congress, making renewable-energy initiatives more likely to succeed.

The optimism displayed by Mr. Scheuth for the future of green investing comes despite the sector's battering from the overall market turmoil this year.

One sustainability platform he uses is the Winslow Green Solutions Fund, which since launching on Nov. 1, 2007, has fallen 28.65%. However, this fund, managed by Boston-based Winslow Management Co., and similar funds will see positive returns, thanks to Mr. Obama's renewable energy plans, Mr. Scheuth predicts.

As a result investors should jump on the ball before the wave begins, Mr. Scheuth said. "If you're not in the market when the updraft happens, you miss out on a lot," he said.

'PART OF THE SOLUTION'

Optimism about green investing next year isn't just driven by the results of the presidential election but also by tax subsidies for renewable energy included in the $700 billion Emergency Economic Stabilization Act passed by Congress in October, according to Winslow president Jack Robinson.

"The new administration sees [alternative energy] as part of the solution, not only for efficiency, but for national security and being a driver of our economy," he said.

Another advisory firm bullish on green investing in the wake of Mr. Obama's victory is Chicago-based Envestnet Asset Management, which this year launched a socially conscious sustainability platform that offers mutual funds and exchange traded funds comprising companies that have strong environmental records (InvestmentNews, Feb. 18).

Envestnet is planning to publish a research paper late this month examining investment opportunities in socially conscious investing for 2009 and how advisers can connect clients to this emerging trend.

"[Green investing] is going to hit center stage with the federal government driving a lot of investments into this area," said Bill Crager, president of Envestnet, which administers $85 billion in assets.

"[The election of Mr. Obama] is a tremendous boost in general to the sustainable investing area," said Michael Lent, a partner at New York-based Veris Wealth Partners LLC, an advisory firm founded in early 2007 that manages $500 million in assets and specializes in socially conscious investing.

An online survey conducted in September and October of 500 members of the Washington-based Social Investment Forum indicated that "clean energy/tech investing" demand is up among clients. Nearly three quarters of those surveyed (72%) reported plans to add new clean energy/tech investing opportunities before the end of next year, according to the study.

Mr. Obama's victory will also be a boost to alternative energy ETFs, with the U.S. potentially leapfrogging Europe and Asia in this sector, according to Claymore Securities Inc. president Christian Magoon. The Claymore/ MAC Global Solar Energy ETF, which was launched on April 15 as the nation's first solar ETF, was up 25% to 30% in the two days leading up to Election Day, due to anticipation of a Democratic landslide, he said.

"An Obama administration and a significant majority of Democrats in Congress I think bodes ... a bright future for alternative energy policy and investing in alternative and renewable energy," Mr. Magoon said. His Lisle, Ill-based firm supervised, managed, serviced or distributed $13.8 billion in assets on Sept. 30.

While there is optimism for green investing, it is still to early to tell whether the sector will get a boost under the Obama administration as traditional energy prices have tumbled recently, said Michael Herbst, a fund analyst at Chicago-based Morningstar Inc. "I do think Barack Obama is sincere and he understands some of the economics behind [alternative energy], but how that translates into opportunity is not clear," he said.

Sue Asci contributed to this story.

E-mail Andrew Coen at acoen@investmentnews.com.

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