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Green Funds in Europe
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Europe is already at the forefront of the renewable energy business - although the US and China are coming on fast - and investment in the sector is expanding rapidly.
A report from Frost & Sullivan, "European Green Investment Market - Investment Analysis", finds that compounded annual average growth of around 18 per cent is expected between 2007 and 2014. This will boost the green investment market from 180.4 billion euros to 572.9 billion euros.
The report notes that, "Governments are offering subsidies and tax relief and encouraging companies to go green. The carbon credit system is the most notable of them. In the future, one can expect governments laying down strict environmental standards, which need to be met by all companies. Additionally, pension funds are directing their money towards investments that are socially responsible.
"A regulation is expected soon wherein pension funds have to invest at least a proportion of their assets in social responsibility investments....This is expected to further propel the growth of the green investments market."
Nevertheless, the report warns that there is "a lot of hype" around green investing, and that this has the potential to artificially inflate share prices.
Says the report: "Green investors should invest systematically and avoid putting all their money in the market at once. Their investment decision should be backed by strong research and they should be careful not to be carried away by the green tag used by marketers."
Europe's largest green fund is the Blackrock New Energy Fund, with assets worth more than four billion euros, and some 40 per cent of this in wind energy. At the end of May 2008 its largest holdings were Vestas Wind Systems (representing nine per cent of the fund) and Iberdrola, Gamesa and Suzlon Energy (each about four per cent).
The second-largest European green fund is the Pictet Water Fund, with holdings worth more than three billion euros. At the end of May 2008 its largest holding was Veolia Environnement, followed by Suez, Nestle, Group Danone and ITT. The third-largest European green fund is the Julius Baer SAM Sustainable Water Fund, with around 1.5 billion euros in assets.
June 20th, 2008
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