MR MONEY MAKER: Save your energy – now we’re all going green
What are the big themes for investors this year? Obviously, the pandemic and all its tentacle-like implications and effects has to be the biggest consideration.
The next most important issue has to be the environment, but this is a huge area and one which is very poorly defined.
That means there are opportunities for charlatans and snake oil salesmen to take our money on investment opportunities that have all the fashionable abbreviations.
Daunting: ESG – environmental, sustainable and governance – is the acronym du jour and the field is bursting with tiresome technical terms in an area few of us will fully understand
ESG – environmental, sustainable and governance – is the acronym du jour and the field is bursting with tiresome technical terms in an area few of us will fully understand.
Sounds daunting, but this is such an important area, you mustn’t let it put you off.
Why Does It Matter?
ESG scrutiny is going to be applied to all companies if they wish to attract and keep investors. Even the oil producers and other obvious sinners will be wearing corporate sackcloth and ashes to persuade us of their new found creed. This means that share prices will be impacted, and that will affect us all.
What Should I Do?
Interesting new ideas and technologies are often found in the micro world of small start-up companies. Problem is, these can be hard to research properly and more important, very difficult to invest in directly.
For those that do finally make their way on to a stock market, much of the early value may have already been taken by backers who got in from the start.
Which is all a long way of saying it is not very practical for small investors to grab a slice of this action.
Better, then, to look for a fund that may have the expertise to identify those future successes.
In the UK we have the benefit of Investment Trusts, which are funds that trade like stocks, so it is easy to buy and to sell.
A couple of key areas I will look at in more detail in future columns are the management and storage of energy and the development of hydrogen power.
The Gore Street Energy Storage Fund has a good spread of storage businesses in the UK and Europe.
This you should have as a longer-term investment as its price trades at a discount to the value of its assets (currently around 12 per cent) though that is not uncommon with such trusts.
It aims to provide a remarkably high dividend yield of around 7 per cent.
This is not a start-up industry but a well established lithium-ion battery technology and provides multiple income streams.
So is it risky? Yes but with already operational units and in an area of growing demand, this green is not only good but financially gratifying.
Then there is US Solar Fund, which, although priced in US dollars, is tradable in the UK. It is still in this sector, but gives some good spread of companies.
Justin Urquhart Stewart co-founded fund manager 7IM and is chairman of investment platform Regionally.