So what is this concept of Renewable Energy?
As per Wiki, Renewable Energy is energy generated from natural resources—such as sunlight, wind, rain, tides and geothermal heat—which are renewable (naturally replenished). In 2006, about 18% of global final energy consumption came from renewables, with 13% coming from traditional biomass, such as wood-burning. Hydroelectricity was the next largest renewable source, providing 3%, followed by solar hot water/heating, which contributed 1.3%. Modern technologies, such as geothermal energy, wind power, solar power, and ocean energy together provided some 0.8% of final energy consumption.
Renewable energy Sources:
- Biofuels
- Biomass
- Geothermal
- Hydro power
- Solar power
- Tidal power
- Wave power
- Wind power
And then what is this concept of Renewable Energy Mutual Funds?
Basically, any mutual fund which invests in the stocks of companies which are in the business of Renewable Energy are called as Renewable Energy Mutual Funds
So, as a normal mutual fund which works on the principle of collecting money from individual investors, pooling in their money, investing in the select group of companies based upon the selected criteria or fund theme. The Renewable Energy Mutual Fund have the simple criteria that they will invest their money in companie which are in the business of making a profit from Renewable Energy.
Why are people looking for investments in Renewable Energy Mutual Funds?
People are drawn to renewable energy for one of several reasons:
Some environmentalist fundamentals lead people to go for investments in Renewable Energy Companies and Renewable Energy Mutual Funds. Reasons can be apelnty like :
- To fight Global Warming
- To prepare for Volatile Oil Prices.
- To improve Energy Security and local economies.
- To cash in on the above trends of Renewable Energy stock prices going high.
How Can I Invest in Renewable Energy Mutual Funds
It's as simple as selecting a Renewable Energy Mutual Fund which matches your style of investing and put your money in that. It may involve calling up your broker and placing the order with him. There are couple of Mutual Funds which focus on Renewable Energy sector. Below we name a few for sake of readers, but they are not necessarily our recommendations to buy - they are quoted as an example.
Related: Green Mutual Funds Low Cost Mutual Funds alternative Energy funds
For mutual fund investors, Renewable Energy focused mutual funds have been few and far between, but the recent growth of interest in the sector has lead to a plethora of new offerings. US investors have a choice like New Alternatives Fund (NALFX) and Calvert Global Alternative Energy Fund (CGAEX) and then there are the so called no-load Guinness Atkinson Alternative Energy Fund GAAEX. However, one should be careful about the load expenses which can be as high as 2%. Look before you leap. That's why it is advisable to go with industry ETFs.
As per the various resources availble on the internet, The Powershares Wilderhill Clean Energy ETF (PBW) and NASDAQ Clean Edge U.S. Liquid Series ETF (QCLN) have expense ratios currently capped at 0.60%, high compared to a general energy sector ETF such as XLE (0.24%), but is a much more economical way to invest than the sector mutual funds. Also recently launched, the Powershares Global Clean Energy Portfolio (PBD) has broader diversification into a greater number of small cap companies, but given its expense ratio of 0.75%, an investor with over $5,000 to put into the sector could closely replicate PBD by splitting his allocation 50-50 between GEX and PBW or QCLN.
is it safe or risky to invest in Renewable Energy Mutual Funds
That depends upon the market conditions. Market experts say that as the world continues to have high energy needs, we will have good scope for the Renewable Energy Investments.
But then, there is also a risk of mutual fund manager's performance. Ultimately, its your call as an investor to make investment or not.
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