Alternative Energy Funds Delivering Strong Returns

Many renewable energy funds are outpacing the S&P 500 Index’s 21% rise over the past 12 months and 5% climb year to date, CNNMoney reports.

The New Alternatives Fund has risen 37% over the past year and 20% year to date, while the Guinness Atkinson Alternative Energy Fund is up 17% over the past year and 27% year to date. A pair of new alternative energy exchange-traded funds from PowerShares, the PowerShares WilderHill Clean Energy Fund and the PowerShares WilderHill Progressive Energy Fund, have both risen about 11% year to date.

In years past, alternative energy funds used to disappoint, but that appears to be changing now. “I don’t think they exceed expectations, but I don’t think they disappoint, either,” said Jeff Siegel, managing editor of a newsletter called Green Chip Stocks. Siegel also noted that the number of alternative energy funds, while currently small, is growing.

Calvert Investments rolled out another such fund last week, the Calvert Alternative Energy Fund. It will invest 80% of its holdings in companies that derive 50% or more of their profits from alternative energy.

At the same time, Calvert announced the findings of a survey it sponsored, conducted by Opinion Research, finding that more than 75% of investors are concerned about the harmful effects of global warming and 80% believe there should be more alternative energy funds on the market. Nonetheless, only 20% of investors working with a financial adviser has had a discussion with them about investing in such a fund.

“This is a big disconnect,” said Graham Huber, a project manager with Opinion Research. “There is strong U.S. investor interest.”

In 2004, investors worldwide placed $28 billion in alternative energy investments, according to the American Council on Renewable Energy. That rose 153% to $71 billion last year.