Green Investment Funds Encompass a Wide Range of Options in the Green Investing Market

April 21, 2010

By Jeff

One aspect of green investing that makes it particular difficult at this stage is how instead of being completely driven by the consumer it is heavily impacted by the various government regulations being constantly approved and altered. Instead of attempting to pick the specific sector of the green market that you think will be most successful, or managing a portfolio of these investments manually, another option is the various green investment funds or mutual funds now available.

These funds are a collection of various green investments maintained by the fund manager. Although some of these funds like the Gabelli SRI Green mutual fund have shown returns of nearly 68%, as discussed in this article, only sixteen of the forty five green mutual funds and exchange traded funds counted by an analyst at Morningstar saw three year returns. This is a good indication of just how different the investments in this category are performing and how much there still is to learn. Several of the articles I read pointed to how quickly this market is changing and how much there is for fund managers to keep up with – new piece of government regulation requiring the implementation of a specific type of technology will send its production sky high, but it is hard to predict the winners and losers.

An example of this is with the Gabelli fund discussed above and in the SmartMoney article. The fund focuses on LED technology which is dictated by the government through its mandate that incandescent lights be replaced with light-emitting diodes and the consumer through the LEDs use in emerging consumer electronics like the LED television. For this reason the article goes on to state that the more diverse funds might be the best bet at this point because they don’t rely on the success or failure of one particular technology. Just like with other financial instruments, the greater volatility causes a greater chance of a big spike, but also of a huge loss.

Reading about these funds has made me realize just how new and unknown the world of green investing is. It was nice to hear from several of the articles that although there is some concern about the volatility currently seen in so many of them (see green bonds for a less volatile option), there is also reason to believe that they are worth looking into for the long term. Even if it’s just to keep an eye on how they perform after this initial spike, they seem like an appealing investment option for anyone interested in sustainability.

Photo Source: Olof S

Tags: Green Investing, Green Investment Funds, green mutual funds, Green REITs, green stocks, stock market