‘Green’ mutual funds bounce bac�� after Trump-induced retreat
BOSTON: After US President Donald Trump’s election last November, investors pulled nearly US$68 million from so-called “green” mutual funds, reflecting fear that his pro-coal agenda would hurt renewable energy firms.
But now investors are pouring money back in, boosting net deposits in 22 green funds to nearly US$83 million in the first four months of 2017, according to data from Thomson Reuters’ Lipper unit.
Investors’ renewed faith in the funds reflects a growing belief the president will not succeed in reviving the coal industry and will not target the government subsidies that underpin renewable power, which have bipartisan support.
It also sends a positive sign for the wind, solar and energy efficiency firms and make up a large portion of the green-fund portfolios.
The coal industry faces problems in the marketplace that are too big for any government to solve, said Murray Rosenblith, a portfolio manager for the US$209 million New Alternatives Fund , among the US green funds seeing investor inflows.
“Trump can’t bring back coal,” he said. “There’s nothing that can bring it back.”
A Reuters survey of some 32 utilities in Republican states last month showed that none plan to increase coal use as a result of Trump’s policies. Many planned to continue a shift to cheaper and cleaner alternatives, including wind and solar.
A White House official did not respond to a request for comment about the administration’s efforts to boost coal or its position on wind and solar subsidies.
Lipper classifies “green” funds as those with screening or investment strategies that are based solely on environmental criteria.
Many make it a point to avoid purchasing shares of traditional oil, gas or mining companies.
The funds, while still an investment niche, have become increasingly popular over the past decade amid rising worries about climate change.
They tend to draw younger and more environmentally minded investors who see profits in the burgeoning renewable power industry.
“Solar and wind power are creating a lot of jobs. There is a longterm secular trend taking place,” said Joe Keefe, Chief Executive of Pax World Management LLC, whose US$418 million Pax Global Environmental Markets fund is one of the biggest in the green fund sector.
Solar firms employed about 374,000 workers in 2016, while the wind industry employed 101,738. Combined, they produced job growth of about 25 per cent over 2015, according to the US Department of Energy.
The average fund among the group of 22 green funds tracked by Lipper posted a six-month return of 9.37 per cent. That lagged the S&P 500 index’s 12.14 per cent, excluding dividends, over the same period through April 30, but beat the S&P’s oil and gas index, along with several major coal companies which have slumped since the election.
The growth helped boost the group’s combined assets under management to US$2.4 billion by the end of April, up from US$2.1 billion in November, according to the data.
Tom Roseen, Lipper’s head of research, said the inflows into green funds could reflect value-shopping after the election triggered an initial sell-off in the solar and wind energy sectors.