Fund manager Pascal Schuler of Swisscanto, the Swiss banking joint venture has asserted his belief that renewable stock will offer the best return for investors in the post financial crisis climate, certainly when compared against fossil fuel investments. Speaking specifically about the Swisscanto Fund Green Invest Equity, Schuler commented that portfolios based on traditional fossil fuel energy such as natural gas, coal and petro-chemicals would prove to be unsustainable within the next 20 years.
Schuler believes that the combination of fossil fuel degradation along with the global move towards renewable energy in light of international carbon reduction treaties will give green stocks a sustainability which will be robust against market fluctuations.
“Water, solar and wind energy are areas where we invest in the long-term, as there is an over-average growth potential when financing kicks off again. Banks will prefer them when they start lending,” commented Schuler who sees green stocks as a healthy, high yield option.
Investors will be attracted to renewable sectors in countries where there is comprehensive legislation in place to protect investment and ensure a long-term viability for capital injected into new, renewable technology. Many governments have introduced feed-in tariffs as a way of attracting investment by offering long-term contracts to renewable investors with a fixed, premium rate guaranteed for any megawatts fed-in to the national grid. Certainly in Germany, this particular system of tariffs has been an extremely successful way of offsetting the cost of generating electricity by renewable means rather than by traditional fossil fuel methods. Many inside the industry will be hoping for a similar system to be introduced in the UK in 2010 but until then Germany has proved to be a hotbed of green technology especially in regards to photovoltaic (PV) technology.
The Swisscanto green fund, worth around $205 million has already taken an interest in German renewable stock and is looking to build its portfolio in the German PV sector. The fund has plans to invest in German renewable sector companies SolarWorld, SMA and Wacker Chemie and will certainly look elsewhere once other countries have strong legislation in place to kick-start the renewable energy industry.
Schuler finished by saying, “We will continue to invest in this segment but focus on companies which have a strong balance sheet and are able to survive this crisis.”