The two clean energy funds we have just bought

Saltydog analyst hopes COP26 is the beginning of a long-term trend and not just a knee-jerk reaction to hype around the event. 

Over the last few weeks, COP26 and climate change have been all over our media, from the news and farming to Strictly Come Dancing. I am not sure what this attention will achieve in the long run, but one must be hopeful.

With two of the major generators of carbon, China and Russia, staying away, success is facing a strong headwind. Nevertheless, with China and the US talking to each other to make a common plan, and the commitment of many trillions of dollars to address the problem, this is definitely a big step in the right direction. I hope that it materialises and does not disappear into a fog of politics.

The arrival of 25,000 people in Glasgow with their accompanying carbon-generating transport, caused Greta Thunberg to chant “you can shove your climate crisis up your arse”! Perhaps a little direct, but from her point of view, understandable.

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There can be little doubt that tackling the adverse results of changing weather patterns can only be a positive, but I do wonder whether the UK is moving too fast in endeavouring to become carbon neutral at the expense of the economy. After all, the UK generates less than 2% of the world’s carbon pollution.

However, that said, it does raise some important questions, including: do we want to breathe polluted air, and do we want to eat factory-produced foods and sugar that leave many people obese and with diabetes? In addition, do we need an over-populated planet? Personally, I don’t think so. In which case, all this attention must be a good thing.

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At the same time as the talks in Glasgow, the US Senate passed a $1 trillion Infrastructure Bill. At the end of last week, the House of Representatives also passed US president Joe Biden’s $1.75 trillion Build Back Better Act, which now has to be approved in the Senate. Although not all this money is earmarked for clean energy projects, a significant amount of it is, and there is also private sector money to consider. Bill Gates has said that he will put $1.5 billion into clean energy causes if the bill goes through.

There are several funds investing in clean energy, and it is not surprising to see that they have gone up in recent weeks.

Past performance is not a guide to future performance

Our demonstration portfolios have recently invested in the Pictet-Clean Energy and Guinness Sustainable Energy funds. They both performed well last year, but peaked in January this year and then dropped by around 15%. They have only recently recovered and are now back in positive territory. Both have outperformed rival fund – VT Gravis Clean Energy Income – as the above chart shows.

We hope that this is the beginning of a long-term trend and not just a knee-jerk reaction to all the recent hype.

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