Investors should think twice about including fossil fuel stocks in their portfolios and opt for something greener instead, according to the manager of the Impax Environmental Markets trust.
Bruce Jenkyn-Jones was speaking ahead of the UN summit on climate change, which started in Paris this week.
He said: “Many investors remain wary of ‘missing out’ from the dividends from fossil fuel stocks.
“But they should also think about capital preservation. In spite of a relatively high level of dividend payments, such stocks can lose core value quickly; on average, the share prices of the stocks of leading coal companies have fallen 90 per cent over three years.
“In contrast, there are approximately 200 stocks with an aggregate value of nearly US$1trn (£664bn) operating in the energy efficiency sector. This high-tech, diverse sector is forecast to grow more rapidly than the economy.”
Impax Environmental Markets has achieved a share price total return of 162.32 on a £100 lump sum over three years compared to an overall weighted average investment company return of 137.39.
Adviser view
Bob Wilson, a director of Norfolk-based Greensky Wealth, said: “Fossil fuel stocks do tend to pay good dividends, but anyone who has been invested in JP Morgan Natural Resources or BlackRock Gold & General will know they have been hit massively by the fall in the oil price, and the performance has been shocking.
“The world is moving towards green energy, so if you are looking for long-term growth, why not get on the bandwagon now?”
