Fund of the week: It pays to be green
Dec 18, 2009
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If you were asked to name a 'green' stock, Siemens may not be the first to spring to mind. Yet the industrial giant is "the world leader in offshore wind turbines", not to mention efficient lighting, says Simon Webber, co-manager of the Schroders Global Climate Change Fund.
Webber invests in any firm that's trying to become more carbon-efficient. Over a year, it's paid off. The fund is up 32.6% against a 24.7% rise in the MSCI World Index.
Looking for new growth opportunities as countries become "low-carbon economies", Webber believes investors can play everything from transport to retail. Polycom, a world leader in video conferencing, is a major holding, as it should benefit as firms cut down on international travel. However, there are also some pure plays on green technology.
Take Dongfang Electric. A long-term holding, it makes equipment for generating electricity in China, particularly in the nuclear and wind turbine markets. "The Chinese government is under a lot of pressure to cut emissions... they have announced a doubling in nuclear power to 70Gw and an increase in wind power to 150Gw by 2020 from 20Gw today.
There are international companies trying to sell into China, but the bulk of orders is going to domestic companies such as Dongfang". The company has doubled in value this year, but still trades on a 2011 p/e of 15.
Webber also likes Ener1, a US firm making batteries for electric cars. "The market is non-existent today. But it is the most overlooked market in the world because there is no way we can cut emissions targets from transport without electric cars". He reckons that 5%-10% of all cars on the road will be electric by 2020.
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Schroders Global Climate Change Fund top ten holdings
| Name of holding | % of assets |
|---|
| BG Group |
2.5 |
| Sekishui Chemical Co |
2.4 |
| Honda Motor Co |
2.3 |
| Cisco Systems Inc |
2.2 |
| Munchener Ruckversicherungs AG |
2.2 |
| Siemens AG |
2.1 |
| Polycom Inc |
2.1 |
| Denway Motors |
2.0 |
| Guangdong Investment |
2.0 |
| Ultra Petroleum Corp |
1.9 |
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