Nearly 200 countries were represented recently in Copenhagen Denmark for the Summit on Climate Change. There was a lot of excitement and certainly, everyone is concerned. Strangely, this has not translated into a lot of investment activity in “green” investing. This type of investment is one that focuses on alternative energy and related eco-centered opportunities. One realization that probably impacts the slow progress is that the trend toward alternative energy and various environmental developments is riddled with risks ranging from economics to geopolitics.

There are currently 38 mutual funds that can be categorized as “green”. Of these 22 have only been in existence since 2007. A few years ago, there was a great deal of excitement about green energy in Europe. These were viewed as high growth opportunities and were well covered in the media. Returns from 2004-2007 were quite good, but tailed off in 2008. Since then, they have basically mirrored overall investment returns for similar products.  The funds are primarily small and have not really gathered much in the way of investor interest.

This probably says a lot about the challenges faced by green investment strategies One challenge is the initial high costs involved in establishing, say a facility for providing wind energy. Coupled with the high cost is the long delay in seeing substantial profits. Compounding this problem is the reality that politics will inevitably rear its ugly head. Some of the political impediments are local and some are the result of threats perceived by the providers of traditional energy. All in all, investors seem to believe that green investments, while necessary, will require patience.  In many cases, generation of profits will take as long as ten years from the date of the initial investment.

Alternative energy will eventually be a true growth industry. Those that invest early will reap the rewards. However, anyone investing here had better be patient. For a list of currently available “green” investment opportunities, please contact us at anadolna@associatesgroupinc.com