MR MONEY MAKER: Save your energy – now we’re all going green
What is going on?
What are the big themes for investors this year? Obviously, the pandemic and all its tentacle-like implications and effects should be the biggest consideration.
The next major issue has to be the environment, but this is a huge area and one that is very ill-defined.
That means there are opportunities for charlatans and snake oil sellers to use our money for investment opportunities that have all the fashionable abbreviations.
Discouraging: ESG – Environment, Sustainability and Good Governance – is the acronym du jour, and the field is bursting with exhausting technical terms in an area few of us will fully understand
ESG – Environment, Sustainability and Good Governance – is the acronym du jour, and the field is bursting with exhausting technical terms in an area few of us will fully understand.
Sounds daunting, but this is such an important area, don’t let it put you off.
Why is it important?
ESG research will be applied to all companies if they want to attract and retain investors. Even the oil producers and other obvious sinners will carry handkerchiefs and ashes from the company to convince us of their newfound faith. This means that stock prices will be affected, and it affects us all.
What should I do?
Interesting new ideas and technologies are often found in the micro-world of small start-ups. The problem is that these are difficult to research and, more importantly, very difficult to invest in directly.
For those who are finally making their way into a stock market, much of the early value may have already been taken by lenders who came in from the start.
That’s all a long way to say that it’s not very practical for small investors to grab some of this action.
So it is better to look for a fund that may have the expertise to identify those future successes.
In the UK we have the advantage of Investment Trusts, which are funds that trade like stocks so it’s easy to buy and sell.
A few important areas that I will discuss in more detail in future columns are energy management and storage and the development of hydrogen power.
The Gore Street Energy Storage Fund has a good spread of storage companies in the UK and Europe.
This should have you as a longer term investment as its price trades at a discount to the value of its assets (currently about 12 percent), although that’s not uncommon with such trusts.
It aims for a remarkably high dividend yield of around 7 percent.
This is not a start-up industry, but an established lithium ion battery technology and offers multiple revenue streams.
So is it risky? Yes, but with units already operational and in an area of growing demand, this greenery is not only good, but also financially satisfying.
Then there is US Solar Fund, which, although priced in US dollars, is tradable in the UK. It is still in this sector, but provides a good spread of companies.
Justin Urquhart Stewart co-founded fund manager 7IM and is chairman of the regional investment platform.