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Investing in alternative fuels By Jeff Salway
Alternative energy is set to be one of the big investment themes in the coming years. Even China recently jumped on the cleaner energy bandwagon with plans to build the world's biggest solar power station, while companies leading the charge Add to that the estimates as to just how big alternative energy will be - fund management house Henderson, for instance, thinks that worldwide investment in renewable energy could grow fivefold to $100 billion (£50.8 billion) a year by 2015 - and it's a compelling story. One advocate of alternative energy, Bill Gates of Microsoft, has already invested substantial sums in alternative energy companies. But is this the best time for investors to take a punt on 'new age' fuels? One drawback is a lack of funds focusing specifically on alternative energy, which increases the risk. One that does, the Merrill Lynch New Energy investment trust (MNE), was launched amid scepticism in 2001, but has grown nearly 200% in the last three and a half years. There are few other bespoke options, however, and alternative energy is still a niche sector. Paul Ilott, senior investment adviser at Bates Investment Services, says: "For smaller investors, it may not be suitable to invest in a bespoke alternative energy fund. The minimum investment is at least £1,000, so if you have £20,000 to invest, you're putting 5% of your portfolio in a very niche area." Another option is to invest in an ethical fund that offers exposure to new energy as part of a wider ethical remit, such as the Jupiter Ecology and the Henderson Industries of the Future funds.
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