FTAdviser.com

Advertising

The global equity Electric & General investment trust said it had been moving further into the alternative energy and energy efficiency sectors after it outperformed its benchmark over 12 months.

In the year to 30 June, the trust's NAV decreased by 9.2 per cent, while its share price declined by 10.3 per cent against a fall of 11.7 per cent in the MSCI World index.

The trust said it had been taking positions that were typically the domain of a climate change fund, such as energy efficiency and alternative and renewable energy.

Lindsay Bury, chairman of the trust, said it had reacted to the rise in energy prices by investing in alternatives such as nuclear, where the company holds Exelon, the largest nuclear operator in the US, and French power giant EDF.

He said the trust had also invested in Toray, a leading manufacturer of carbon fibre, which helps planes become lighter and more energy efficient.

Taube Hodson Stonex Partners, which manages the fund, has been investigating the solar power market, where it already holds Q-Cells, the world's biggest photovoltaic cell manufacturer, and Renewable Energy Corporation, the largest producer of solar-grade silicon.

Mark Evans, fund manager at THS Partners, said the solar power industry had generated considerable momentum and valuations looked cheap after dips over the last 12 months. As with many new technologies, he said investors had become excited about the industry, but valuations had risen and then come off as investors withdrew.

He said from a pricing perspective, the case for solar was strengthening.

"The great thing about solar is that we're not too far away from grid parity in some parts of the world. It's a subsidy-dependent industry to a large extent, but seeing grid parity around the corner should give it a push."

The industry held attractions for individual as well as larger-scale consumers, he said.

"It's a combination of feeling good about generating your own electricity in a low-carbon way."

Mr Evans said countries such as Spain and Germany that subsidised production were fine opportunities for investment. In terms of consumption, he said he was examining sunnier regions such as Italy, Spain and California for trends.

"It's easiest in hot countries," he said. "You have more sunshine, but also a greater need for air conditioning."

As with industry leaders Q-Cells and Renewable Energy Corporation, Mr Evans said THS Partners was looking for larger companies in the sector with solid earnings. But, according to Mr Evans, alternative energy and energy efficiency plays remain a small part of the portfolio.

"It is now a low single-digit percentage."