14.04.2011

 

 

Matthew Jamurtas

Portfolio Manager

New Mellon Asset & Wealth Management S.A.

 

OVERVIEW

As global warming continues and societies and economies move to low-carbon models the need for cleaner energy sources is set to grow and investment into the green energy sector has the potential for impressive rewards. The WIOF Green Energy Performance Fund, managed by a top asset management company with more than 25 years’ experience in managing local and international funds, offers investors the chance to take advantage of that potential. Focusing on long-term capital growth of asset value the Fund invests in worldwide renewable energy sector equities and equity-related securities, targeting companies with steady performance over a long period of time, growth opportunities and reputable management teams to create a diversified portfolio achieving outstanding long term performance.

 

THE RISE OF GREEN ENERGY

Traditional fossil fuels are already being seen as not just ecologically unsound but also volatile and insecure. The recent events in North Africa have brought into sharper focus larger questions about reliance on fossil fuels. Oil prices have soared because of political instability – a situation that governments, as well as corporations, will be acutely aware of, and which will prompt questioning of traditional energy sources and supplies. Even before the uprisings in MENA countries energy watchdogs had warned that the era of cheap oil was over. Meanwhile, other factors are driving the Green Energy sector:

 

  • The needs of countries like China and India to reduce their dependency on fossil fuels will drive the renewable energy market in 2011 and in years to come.

  • Countries are turning to energy efficiency measures to benefit from “quick wins” in cutting power use and reduce emissions.

  • Majority of Green Energy companies reported strong results for 2010 and guided double digit growth for 2011.

  • Government subsidies are becoming less of a crucial factor for Renewables as technologies are becoming cheaper and more cost competitive to fossil fuels.

 

Governments and politicians are also becoming more aware of the benefits – both political and ecological – of supporting green energy. More and more countries’ energy policies are focusing on the importance of cleaner energy sources and it is expected that green energy will account for 46% of global electricity production by 2050 with an estimated USD10.5tn investment needed by 2030 while total investments in green energy reached an estimated USD200bn in 2010.

 

IMPRESSIVE POTENTIAL

Taking all these factors into account, investment into the green energy sector has the potential for impressive rewards. The green energy sector also boasts a wide range of fields for investment from wind, solar, hydro and geothermal power to sectors such as energy storage and energy efficiency. These sectors have shown, and continue to show, impressive growth, including in the solar sector where global installed capacity is expected to more than double by 2014.

 

Solar Sector Production

Solar Sector Production

 

The potential of the Green Energy sector can also be seen in the Fund’s impressive performance in the first two months of the year when it gained 6.4% (in USD).

The performance of the LED and lighting sector also stands out. The LED market is expected to triple by 2015 as LED TV and lighting demand soars while last year was predicted to see similar-sized growth in the LED lamp replacement and luminaire section.

 

Expected LED Market Growth

Expected LED Market Growth

Fast-growing markets, demand outstripping production, and phenomenal investment from both public and private sources are all hallmarks of a sector that is one of the most attractive investment propositions around today.

 

OUTLOOK

The outlook for the Green Energy sector is bright with record investments expected this year and in the years to come. The need to shift to a low carbon economy is today stronger than ever. With an installed capacity of less than 300 GW, Green Energy accounts for just 5% of global electricity production. Oil will remain the dominant fuel in the primary energy mix in the next two decades, but its share in that mix will fall as oil prices continue to rise and governments promote fuel efficiency which in turn will lead to a switching away from oil in all sectors. Added to this, the nuclear disaster in Japan has put Green Energy stocks firmly in the spotlight as there are now considerable doubts over governments’ future plans for nuclear power plant construction. China, India, Germany and Britain have already said they will review nuclear power issues following the nuclear incidents in Japan before moving forward with new nuclear power stations. In the current climate we see Green Energy stock valuations as very attractive as the environment for project financing has improved.

 

INVESTMENT MANAGER

INVESTMENT MANAGER  New Mellon Asset & Wealth Management

New Mellon Asset & Wealth Management (NEW MELLON) is an independent employee-owned asset management company led by a team with more than 25 years’ experience in managing local and international funds. Founded in 2006 and based in Athens (MELLON derives from the Greek word “ΜΕΛΛΟΝ“ meaning future), the company focuses exclusively on global investments related to Climate Change, such as Renewable Energy, Efficiency, Waste Management and Recycling. ΝΕW MELLON has developed and follows a tested investment process adjusted to the unique features of the Green Energy sector.

 

IMPORTANT NOTE: This report has been prepared for information only, and it does not represent an offer to purchase or subscribe to shares. World Investment Opportunities Funds (“WIOF”) is registered on the official list of collective investment undertakings pursuant to part I of the Luxembourg law of 20th December 2002 on collective investment undertakings as an open-ended investment company. WIOF believes that the information is correct at the date of production while obtained from carefully selected sources considered to be reliable. No warranty or representation is given to this effect and no liability can be assumed for the correctness or accuracy of the given information which may be subject to change at any time, without notice. Past performance provides neither a guarantee, nor an indication of future performance. Value of the shares and return they generate can fall as well as rise. Currency fluctuations, either up or down, may also affect value of the investment. Due to continuing market volatility and exchange rate fluctuations, the performance may be subject to significant changes over a short-term period. Investors should be aware that shares in the financial instruments entail investment risks, including the possible loss of the invested capital. Performance is usually calculated on the basis of the relevant NAV unless stated otherwise. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested. WIOF prospectus is available and may be obtained through www.1cornhill.com. Before investing in any WIOF Sub-fund(s) investors should contact their financial adviser / legal adviser / tax adviser and refer to all relevant documents relating to the WIOF and its particular Sub-fund(s), such as the latest annual report and prospectus that specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing. In the event investors choose not to seek advice from a financial adviser / legal adviser / tax adviser, they should consider whether the WIOF is a suitable investment for them.