NEW YORK — While most investors are concerned about the effect that climate change has on the environment, few are investing in the alternative-energy sector, according to a recent report.
NEW YORK — While most investors are concerned about the effect that climate change has on the environment, few are investing in the alternative-energy sector, according to a recent report.
More than 76% of surveyed investors said that they were concerned “about global warming and what climate change could mean” during their lifetimes and those of their children, according to the report, “Climate Change/Alternative Energy Survey,” which was released last week by Calvert Group Ltd., a socially conscious investment company in Bethesda, Md.
Nearly 85% of the investors agreed that alternative energy investments represented an opportunity both to support the environment and to generate profits.
However, only 20% who used a financial professional said that they discussed such investments with them.
“Climate change has been a concern for Calvert since the mid-1990s,” said Bennett Freeman, senior vice president for social research and policy at Calvert Asset Management Co. “It is the single most dramatic and significant sustainability challenge facing this world in the next century.”
“The findings reflect a growing awareness of the problem and the need to take steps to address it,” Mr. Freeman added. The telephone survey of 1,094 investors was conducted last month by Opinion Research Corp. of Princeton, N.J.
Alternative energy is a topic of greater concern to Democrats than to Republicans or to independents.
Fully 92% of Democrats, 59% of Republicans and 76% of independents said that they were concerned about the effect of climate change. “Worries about global climate change are strong despite political party affiliation,” said Graham Hueber, senior project manager at Opinion Research.
Some advisers are already investing their clients’ money in environmentally friendly investment vehicles.
“We, as active managers, believe wholeheartedly that alternative energy is going to be a boon for the future,” said Drew V. Tignanelli, president of The Financial Consulate Inc., a Lutherville, Md., firm with $200 million under management. “So many advisers use the efficient-market theory, where they look for baskets of assets to invest in.”
Mr. Tignanelli added that 2% to 5% of his portfolio is focused on alternative-energy investments.
“We are seeing more interest in socially responsible investing, and we are putting money into environmental funds,” said Stacy Francis, president of Francis Financial Inc. in New York, which manages $10 million. “We found that [the fact that] we can help guide clients through the socially conscious arena has helped market our firm, and clients like to hear that they are doing good.”
Don’t neglect returns
However, some advisers recognize that concern about the environment is valid, but it is not more important than investment returns.
“Simply because an investment is good for the ecology and is a hot political topic doesn’t mean that you should invest in it,” said Gary Greenbaum, president of Greenbaum & Orecchio Inc., an Old Tappan, N.J., firm that manages $420 million.
He added that he urges clients to give to charity, and in that way, they will do more good by giving back.
In addition to releasing the survey last Wednesday, Calvert launched the Global Alternative Energy Fund (CGAEX) to “meet investor demand for alternative energy both as a global investment opportunity and as an essential response to the climate change crisis.”
The fund seeks out companies that are leaders in the alternative-energy market and those with a significant presence in the sector.
The portfolio will comprise companies that work with wind power, solar power, biofuels, fuel cells, geothermal energy and emerging technologies. The fund holds 50 to 70 securities, with 60% of the investments in European companies, 30% in U.S. companies and 10% in the rest of the world.
Fully 80% of the fund will be invested in companies that are pure plays —with 50% of the revenue coming from alternative energy. The remaining 20% will be invested in companies that are considered market leaders.
KBC Asset Management Ltd. of Dublin, Ireland, will subadvise the fund, which carries an expense ratio of 1.85%.
Calvert Group has $15 billion in assets under management.
