Friday, November 16, 2007

Going Beyond the Hype of Green Investing

From Morningstar:

An initial roadmap for navigating the growing number of "green" funds and ETFs.

...What Does Green Mean?
We've seen several approaches to green investing. We call one style the "best-in-breed" approach, in which the idea is to invest in companies with industry-leading environmental track records. That tack guides Green Century Equity (GCEQX) which currently owns Proctor & Gamble (PG) and 3M Company (MMM) because its managers consider them to be among the greenest operators in their industries. We also see funds like Winslow Green Growth (WGGFX) that invest in "clean" companies, meaning those that have no negative environmental impact. Lastly, a number of funds invest in "environmentally proactive" firms that produce goods or services linked to green initiatives like alternative energy, energy efficiency, emissions reduction, water distribution, and agriculture. Such options include the Guinness Atkinson Alternative Energy Fund (GAAEX) and the ETF PowerShares WilderHill Clean Energy (PBW) Some funds blend several styles, such as Spectra Green (SPEGX) and Portfolio 21 (PORTX)

Investors need to look under the hood and decide for themselves which green strategy they'd prefer. Socially conscious investors may be surprised that not all green funds fit the bill (because they may invest in nuclear power companies, for example). Others seeking the biggest bang for their buck might favor a fund in which management tends to invest strictly where it sees the most attractive growth opportunities....MORE