Eco-friendly investment choices
Green Investing

Green Investing: Eco-Friendly Investment Choices

At EnviroCitizen.org we support and encourage green investing.  We can’t assure that investing in companies that are leading the way to a more energy efficient, sustainable planet will pay off any better than investing in any other companies or in general market indexes like the S&P 500.  However, companies working to modernize the woefully inadequate power grid, as well as companies designing and providing renewable, sustainable energy sources will probably be decent bets.  With the U.S. and other countries allocating hundreds of millions if not billions of dollars to research and development in these areas, it is likely that many profitable technologies will emerge and blossom.

Investing in green companies can mean many things.  One can invest in companies that develop and market solar panels and wind energy equipment or one can invest in their customers who are implementing these strategies and projects on a large scale basis.  Another strategy is to seek out small and medium sized companies that are researching and developing the technologies of the future to deliver a more eco-friendly, sustainable planet.  Yet another strategy is to look to larger companies like IBM (IBM), General Electric (GE), Cisco (CSCO), Google (GOOG), Microsoft (MSFT) and others who have small but fast growing businesses tilted toward green initiatives.  Don’t overlook engineering and construction firms such as ABB (ABB), Siemans (SI) and others who are developing meaningful, eco-friendly products, processes, and technologies.

Other plays on eco-friendly investing can range the gamut from makers of non-toxic, green cleaning products, natural cosmetics, makers of recycled or reclaimed furniture and building materials and even eco-tourism operators.  Remember that investing in any individual company has its risks.  So, always consider a diversified portfolio where green investing is a well thought out slice.  Remember that smaller companies can have a higher risk to reward ratio than larger ones – although they will generally provide more of a pure-play investment in green products, processes or services.  Because green investing is in its infancy, it may make sense to take a long-term perspective on any eco-friendly investment you buy for your portfolio.  As always, it makes sense to consult your investment advisor as well as to calibrate your portfolio appropriately for your risk and reward tolerance level.

Another strategy for green investing may be to invest in mutual funds or ETFs (Exchange Traded Funds) that invest in a broad range or portfolio of green, eco-friendly investment opportunities.  Many green mutual funds will likely be actively managed – which means a portfolio manager is evaluating companies one by one for the portfolio and deciding every day which ones to keep in the portfolio and which to jettison.  Picking a green mutual fund is not easy as there is no category for them yet at any of the major rating agencies.  There are quite a few green ETFs out there with more popping up every day.  Some of these funds and ETFs have very little track record as they are relatively new.  ETF’s are bought and sold like stocks and can be traded during the entire trading day.  Mutual funds may only be traded at the market close each day at the calculated net asset value of their holdings.

Here is a partial list of some green mutual funds and green ETFs:

  • Alger Green (SPEGX)
  • Calvert Global Water (CFWAX)
  • Claymore Global Solar Energy ETF (TAN)
  • Claymore/LGA Green ETF (GRN)
  • Dreyfus Global Sustainability (DGYAX)
  • First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index (GRID)
  • First Trust ISE Global Wind Energy Index Fund (FAN)
  • First Trust NASDAQ Clean Edge ETF (QCLN)
  • Gabelli SRI Green (SRIAX)
  • Global Warming ELEMENTS ETN (GWO)
  • Green Century Equity (GCEQX)
  • Guinness Atkinson Alternative Energy (GAAEX)
  • Market Vectors Solar Energy (KWT)
  • Northern Global Sustainability (NSRIX)
  • Pax World Global Green (PGRGX)
  • PFW Water (PFWAX)
  • PowerShares Water Resources (PHO)
  • PowerShares Cleantech Portfolio ETF (PZD)
  • PowerShares Global Clean Energy Portfolio ETF (PBD)
  • PowerShares Global Nuclear Energy Portfolio ETF (PKN)
  • PowerShares Nasdaq OMX Clean Edge Global Wind Energy ETF (PWND)
  • PowerShares WilderHill Clean Energy Portfolio ETF (PBW)
  • PowerShares WilderHill Progressive Energy Portfolio ETF (PUW)
  • SAM Sustainable Climate (SMCNX)
  • SAM Sustainable Water (SMWNX)
  • Van Eck Market Vectors Environmental Services ETF (EVX)
  • Van Eck Market Vectors Global Alternative Energy ETF (GEX)
  • Van Eck Market Vectors Nuclear Energy ETF (NLR)
  • Winslow Green Growth (WGGFX)