Even best energy fund has operated at a loss

GOING GREEN might be good for your conscience, but it is unlikely to be so for your pocket – at least not in the current environment.

According to MoneyMate, the average Irish gross domestic fund invested in new energy has lost 14.7 per cent in the almost nine months of 2010 to September 24th and is down by the same amount in the previous 12 months.

As an indication of how poor returns currently are in this sector, the best performer in the category, Aviva’s Blackrock New Energy Fund, has actually lost 9 per cent so far this year and is down by 7.3 per cent over the last 12 months.

The fund aims to provide an income over the long term by investing in the equities of new energy companies, which are engaged in alternative energy and energy technologies including renewable energy, alternative fuels, automotive and on-site power generation.

The fund’s biggest holding is in American Superconductor, a US company that sells wind turbine technology to the Chinese market. The fund has an almost equivalent geographical weighting to the US, Britain, Europe (the UK excepted), China, South Africa and Canada.

According to Mark Elliott, head of Britain and Ireland retail sales with BlackRock, there are three key reasons behind the poor performance of the sector so far this year.

The first is the “lingering effect of the credit crisis”, which has made it more difficult for new energy companies, reliant on project financing, to access debt funding.

The weakness in electricity prices has also hit returns, while the “bureaucracy of fiscal stimulus” and the resulting delays in passing on government support for the sector has also slowed down growth.

Elliott is more sanguine about the prospects for the sector, expecting government support, in the form of measures such as the US’s new energy Bill, and rising oil prices to boost performance next year.

Quinn Life’s Clean Energy Freeway Invest fund is the worst of the bunch, having lost over 20 per cent so far in the year to September 24th, and 21.5 per cent over the past 12 months.

An index-linked fund, it tracks the performance of the SP Global Clean Energy Index.

Best performer YTD:

Aviva LP Blackrock New Energy Fund -9.0%

Worst performer YTD:

Quinn Life Clean Energy Freeway Invest -21.5%