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Calvert Offers Alternative Energy Fund


NEW YORK-Global warming will have major economic, environmental and societal impacts if steps are not taken to help reduce the problem, and increasingly investors and the public are aware of this sobering fact.

In response, Calvert Funds has launched the Calvert Global Alternative Energy Fund, which will invest in U.S. and international companies that are focused on alternative energy sources, such as solar, wind and biofuels.

"The fund is able to meet investors' investment strategy and social needs," said Steve Falci, chief investment officer of equities at the Bethesda, Md.-based Calvert, at an "Alternative Energy Investing" event the company hosted here last week.

"Alternative investing is quite an emerging theme and maturing rapidly," said Jens Peers, director of ECO Funds at Dublin-based KBC Asset Management and sub-advisor to Calvert's new fund. Peers added that many investment banks have shown a greater interest in the sector the past few months.

Seventy-six percent of investors are concerned about global warming and what climate changes could mean in terms of major changes during their lifetime and those of their children and grandchildren, according to a survey Calvert sponsored and that was conducted by Opinion Research Corp. For the "Calvert Climate/Change Alternative Energy" survey, the Princeton, N.J.-based company interviewed 2,600 individuals, 1,094 of whom were identified as investors.

Additionally, 85% of the investors agreed that alternative energy investments, such as wind, solar and other sources of clean power, represent a dual opportunity to support the environment and generate a profit at the same time.

The survey findings reflect a growing awareness of the problems, said Bennett Freeman, senior vice president for social research and policy at Calvert. From the heat waves in Europe to Al Gore's documentary "An Inconvenient Truth," it is not just the substance of the issue, but real images that are getting across the severity of the situation to the pubic, he said.

The recently launched fund has a universe of approximately 120 stocks to choose from. The U.S. represents 30% of the companies. Sixty percent of the stocks are European companies, and the remaining 10% are scattered throughout the rest of the world, mainly in China and Japan, Peers said. Calvert screens the companies using socially responsible criteria.

"Diversification is very important in these types of funds," Peers said. The portfolio needs companies in the more mature sectors of solar and wind, but also emerging growth, early stage companies as well, he said.

Additionally, the portfolio has to be actively managed because some of the stocks are very specific and rely on other stocks to perform well, he said. "Managers have to understand the value chain," Peers noted.

There is a push toward alternative energy now for a few reasons. One is that the price of fossil fuels is very expensive and rising, while renewable energy prices have been falling, Peers observed.

"The world must move away from its dependence on fossil fuels," Freeman commented.

Also, there is increased political support for using alternative energy choices. The issue has moved from a "political debate to real action," Peers said. There is a lot of work to be done on the federal level, and some states such as California are taking the lead already, he said. In California, a new bill was signed last September that would require reducing the state's carbon emission to 1990s levels by 2020 and further reducing emissions to 80% below 1990 levels by 2050.

Seventy-one percent of the investors surveyed said they would consider investing in an alternative energy mutual fund. However, although investors are looking to invest in mutual funds with a clear focus on alternative energy, 84% said there are not enough opportunities to do so.

Speakers at the Calvert event also noted that investment advisers need to be more conscious of offering alternative energy mutual funds to their clients. Only 50% of investors who use an adviser said that they had discussed alternative energy investing with them. "This is a big disconnect, as investors want more choices in alternative energy mutual funds," said Graham Hueber, senior project manager at Opinion Research.

In particular, women are more concerned about global warming, compared to men, with 86% of women saying it is a concern, compared to 66% of men. Advisers should heed these concerns, speakers said, as women are significantly less likely then men to have a discussion with their financial adviser regarding alternative energy investing.

Calvert is introducing this specialized fund at a time when socially responsible investing on the whole is seeing increased demand. More investors want SRI options in defined contribution retirement plans, according to a survey of 129 plan sponsors representing public, corporate, faith-based, healthcare and other plan types by Mercer Investment Consulting.

The survey, "Defined Contribution Plans and Socially Responsible Investing in the United States," found that 60% are either offering or intend to offer an SRI option within the next three years.

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