Energy funds

Funds such as KBCAM Alternative Energy operate like any other similar investment, balancing their portfolios to try and maximise gains.

So they are currently overweight in sectors where earnings are likely to be high and underweight where they are low.

Currently KBCAM is overweight in companies that produce a key material used in solar power cells called poly-silicon, as there is a shortage of this material and thus margins are high. In the medium term it will pull back from this position as extra supplies come on stream, easing the shortage and cutting margins.

Along with the normal criteria used when selecting investments, it applies green and socially responsible investing (SRI) measures.

The companies in its portfolio must earn a substantial share of their revenues from the alternative energy sector, and can't have superficial involvement in the business, although they have an involvement in other activities.

A lot of the funds' investors, particularly in the US, have strict SRI guidelines that have to be applied, along with the usual requirements designed to deliver returns.

According to Ryan, many of them have a big exposure to green energy.

However, while KBC's criteria cover the use of the products made by the companies in which they exist, they don't include looking at how much energy is used in their manufacture or where that power is ultimately sourced.