BlackRock blames loan crisis for clean-energy outflow
MADRID: Renewableenergy funds suffered record outflows this year, reversing their direction from 2009, as money managers including BlackRock Inc. said the credit crunch dimmed the outlook for solar and wind power projects.
Investors pulled 931 million euros ($1.2 billion) in the first 10 months, already eclipsing the full-year withdrawals in 2008 when the global financial crisis spooked investors, according to data compiled by Lipper Inc. Last year cleanenergy funds captured 1.3 billion euros of new money, Lipper said.
Tighter loan terms for clean-power projects, greater competition from Chinese manufacturers and reduced subsidies from European governments hammered some of the stocks that had been favorites of fund managers before 2010, such as Vestas Wind Systems A/S, the world's largest wind-turbine maker. Funds that held oil and gas companies were gainers, a separate survey said.
"The new-energy market and related stocks were significantly impacted by the credit crisis," Robin Batchelor, manager of the $2.9 billion BlackRock New Energy Fund, said in an e-mail. Reduced demand for energy and "the fact that governments were perceived to have many new worries on their agenda combined to create a difficult environment," he said. New Yorkbased BlackRock is the world's largest money manager.
Conventional energy stocks saw the biggest increase in holdings and were the largest bets for funds, according to a Bank of America Merrill Lynch survey of 209 money managers controlling $569 billion, conducted Dec. 3 to Dec. 9.
The clean-energy sell-off is a blow to policymakers in the U.S., Japan and the European Union who pledged last year in Copenhagen to ramp up investment as they channel $100 billion a year in climate aid to developing nations by 2020.
The withdrawal extended to environmental funds, which had net withdrawals of 373 million euros, also a record, according to Lipper, a unit of New York-based Thomson Reuters Corp.
At BlackRock, whose clean-tech fund is one of the world's largest, assets dropped to $2.9 billion on Oct. 31 from $3.8 billion 12 months earlier, and the fund's value fell 8 percent. That suggests clients pulled about 560 million euros, or 15 percent of assets, according to Bloomberg calculations.
A BlackRock spokeswoman didn't immediately comment on the calculation. Batchelor declined to comment on outflows.
Climate negotiators meeting in Cancun, Mexico, this month agreed to limit global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) without reaching a deal on how to achieve it. Current pledges by individual nations will lead to 4 degrees of warming by 2100, according to Climate Interactive scientists who model warming scenarios.
" There was positive progress, but without t he urgency or on the scale needed to meet the 2-degree goal," said Peter Sweatman, chief executive officer of Climate Strategy & Partners, a Madrid-based consulting firm. "The warning lights are flashing red."
The worst performing environmental or clean energy fund in the Lipper database that tracks returns of individual pools was Azemos Asset Management AG's Hornet Renewable Energy Fund II, which lost 24pc in the 12 months to Sept. 30 investing in stocks such as SMA Solar Technology AG and Meyer Burger Technology AG. -Bloomberg