7

I am thinking about investing in the renewable energy sector (there should be growth potential, right??), and have heard of a few specific stocks like Vestas wind energy.

Since I am just beginning to educate myself in this area, can anyone point me in a general direction about how to find a few, more well established, mutual funds that I can start with?

  • 2
    "There should be growth potential, right??" I dunno! It's definitely trendy, but it's also rife with politics, and I'm not impressed by the business fundamentals outside of that. You're going to rely a lot on government mandates, and be subject to lots of what they term "political risk". Do your research and don't just stuff money into the sector; it has plenty of opportunities to destroy your investment capital! – fennec Sep 25 '10 at 0:56
  • money.stackexchange.com/questions/3785/… and money.stackexchange.com/questions/2458/… and money.stackexchange.com/questions/3403/… are all great other questions asked about learning mutual funds. – Troggy Sep 26 '10 at 5:22
  • Your question is great. I edited the question a little to ask for how to find good funds meeting your criteria instead of recommendations of specific mutual funds. Recommendations for specific funds or stocks are off-topic for the site. I look forward to reading answers. – Alex B Sep 28 '10 at 16:43
2

Usually it makes sense to invest in individual companies when you're investing in a "hot" sector. Secular funds have their own risks that can be difficult to measure. First Solar is one of the premier PV players.

The fund gives you a false sense of diversification. If you bought a mutual fund in 2000 in the computer space, you'd have pieces of HP, Dell, Apple, IBM, EMC, Cisco, Intel etc. Did the sector perform the same as the companies in it? Nooo.

As for renewable energy, IMO that ship has sailed for the "pure play" renewable stocks. I'd look at undervalued companies with exposure to renewables that haven't been hyped up. (or included in a sector mutual fund)

Examples for this area?

  • GE (who makes the turbines?)
  • Trinity Industries (known for rail cars, but makes wind turbine components)

The problem with this sector is that the industry is dependent on government subsidies, and the state of government budgets make that a risky play. Proceed with caution!

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.