FOR PUTTING MONEY IN NEW ENERGY

Choosing The Right Clean Energy Mutual Fund or ETF
Tom Konrad, March 5, 2011 (Alt/Energy Stocks)

"If you want to invest in renewable energy and energy efficiency with just one fund, this is what you need to know…[A] clean energy fund is one that primarily invests in companies involved in renewable energy, energy efficiency and conservation, efficient and alternative fuel vehicles, and companies that are part of the supply chain for any of the above sectors.

"Many of the mutual funds I looked at also invest in environmental services/waste management, recycling, water, and natural gas utilities. Waste management, recycling, and water each fit rather well…Municipal solid waste is an excellent source of renewable biomass, recycling saves energy…and water is inextricably linked to energy… [S]ome of the mutual funds I looked at include natural gas companies…[If you want] nuclear power, you might consider…adding a nuclear ETF…"

the Gabelli SRI Green Fund class AAA (SRIGX) (click to enlarge)

"This article is intended to condense the information from my previous series in a useful fashion…[T]he original articles…Costs of Clean Energy Mutual Funds…Sector Breakdown of Clean Energy Mutual Funds…Past Performance of Clean Energy Mutual Funds…Stock Picks from Clean Energy Mutual Funds…The Effectiveness of Active Management in Clean Energy…Interview with the Manager of the Top Performing Clean Energy Mutual Fund…Clean Energy ETFs in Depth…[and] Clean Energy Mutual Fund and ETF Tax Efficiency [are linked on this page]…

"The major factors to consider when selecting a clean energy fund are…[1] Which fund is likely to produce the best performance? …[and, 2] Given my intended holding period and investment size, how much will the costs reduce the fund's performance?…"

click thru for interactive charts

"…The best performing fund by far was the Gabelli SRI Green Fund class AAA (SRIGX)…I generally take statistical analysis with a healthy dose of skepticism…[It] can tell us what has already happened, but unless we know why it happened, we can't know if the performance will persist…For an investor who wants a clean energy fund, and who agrees that a superior manager has the opportunity in this young and frequently misunderstood sector to produce superior results, the Gabelli SRI Green Fund is the clear choice based on a track record that is much better than any other fund. This choice should be re-assessed after two to three years…

"Many investors will find a 2.01% expense ratio hard to stomach. For them, ETFs are the best choice…[T]he Powershares Wilderhill Clean Energy Index (PBW) stands out as the lowest cost for short term (less than 1 year) investors…For longer holding periods, my top choice is probably the Powershares Cleantech Portfolio (PZD), because it has what I consider to be the best allocation between clean energy sectors…"