These are the companies that are pioneering new solutions to energy and environmental challenges, such as solar, wind, geothermal, hydro,tidal, biofuel, and other energy-generation or storage technologies.
These are the companies that supply key parts, materials,services, or technologies to those companies that develop or own sources of energy alternatives and are thereby likely to benefit from eco-technology trends.
Three-tiered environmental investment strategy works to broaden opportunities
By not confining itself to just energy-alternative companies, Fund management adds a distinctive identity to the Energy Alternatives Fund. Each of the three investment types - eco-technology leaders,critical-path companies, resource-based investments - is expected to enjoy synergy with the others.
At the same time, companies within these different types typically have different risk and growth profiles and could respond differently to economic cycles and influences. When such factors create volatility (for example, in energy prices), the Fund will seek to take advantage of this volatility by occasionally using other investment instruments such as shortsales, options, and commodities futures, as well as emphasizing a different asset allocation among the following three investment types.
Eco-technology leaders are generally geared to higher energy prices and could be expected to increase in demand and value whenever energy prices rise. A sample investment idea is the consideration that vehicles will likely progress from hybrids to ultra-light hybrids and eventually to fuel-cell powered ultra-light vehicles.Ultra-light hybrids could save two-thirds of today's U.S. car/light-truck demand for gasoline. Fuel cells could save even more.
Critical-path companies are often Industrial. A sample investment idea is knowing that carbon fiber composites in the new 787 aircraft by Boeing (not in the Fund's portfolio) will cut fuel use by 20 percent.Carbon fiber is four times stronger than traditional materials, but weighs 40 percent less. An industrial supplier of carbon fiber becomes a natural investment consideration.
Resource-based investments are often considered late-stage cyclicals. A sample investment idea relates to the convergence of food, animal feed, and biofuel, all drawing on agricultural commodities. That could lead toward investments in plantations and sugar/ethanol producers.