Analysts welcome interest in green funds

Last month's 'carbon Budget' from Alistair Darling and the election of Barack Obama as US president have prompted many investors to look at opportunities within the infrastructure, energy and water industries, according to industry experts.

Tom Tuite Dalton, analyst at Oriel Securities, said the green universe had "finally come of age" in recent years as interest in the sector increased.

In an analysis of three green investment trusts - BlackRock New Energy, Impax Environmental and Jupiter Green - Mr Tuite Dalton said funds now had a much wider universe of companies from which to choose.

He said: "No longer is the universe simply a collection of predominantly loss-making small-cap companies, as was the case at the start of the decade when Impax identified a global investable universe of just 300 mainly small companies.

"The investment choice for the more diversified green funds has never been greater, and the green universe is set to remain a core beneficiary of global capital flows on a long-term view."

Bruce Jenkyn-Jones, managing director of listed equities at Impax Asset Management, said although the industry faced recession and economic volatility, drivers for growth remained.

"We have some exposure, particularly in construction, but a lot of that negative outlook is already priced in."

Mr Tuite Dalton agreed, adding that while oil and commodity price falls had had a negative impact on the environmental sector, there were a number of positive signs for growth.

"More legislation and fiscal packages should benefit the sector going forward as a growing number of G20 members strive to meet their emissions targets and look to stem job losses through green job creation," he said.

Mr Jenkyn-Jones said governments were using the recession to increase spending in more public and sustainable schemes as a way of generating more jobs and stimulating the economy.

According to Mr Tuite Dalton, investors should begin to look at the sector as a way of diversifying their portfolios in the current environment.

He added: "Arguably, now is the time for value investors to start building long-term stakes in the sector by taking advantage of the current attractive valuations in the underlying investee companies."

Mr Jenkyn-Jones said changing attitudes in the UK toward investing in green initiatives - while in itself not a major boost - was symptomatic of growing political support for the sector.

"Our fund is not a core UK offering," he said. "The UK is at the lower end of what governments around the world are doing."