Guinness Alternative Energy set to benefit from shale revolution
18th September 2013 17:02
by Tanzeel Akhtar from interactive investor
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The managers remain positive in their outlook, expecting the alternative energy sector to boom.
Over one year the fund, managed by Matthew Page and Edward Guinness, has returned 66.6% compared with -11% in the FO Commodity and Energy sector as at 17 September.
The fund invests in public listed equities in the alternative energy industry. Half the stocks held are exposed to the wind sector and the other half to the solar sector.
Key drivers in the alternative energy space are dwindling fossil fuel supplies, energy security concerns, environmental issues and climate change.
Page and Guinness say expectations of the long-term natural gas price in a world with shale gas are rising, and public support for the sector remains strong.
| Holding | Weighting (%) |
| Nordex SE | 4.5 |
| Renesola Ltd | 4.3 |
| Trina Solar Ltd | 4.1 |
| China Singyes Solar Tech Hold Ltd | 3.8 |
| Maple Energy plc | 3.8 |
| China Longyuan Power Group Corp Ltd | 3.7 |
| China Suntien Green Energy Corp Ltd | 3.7 |
| Ormat Technologies | 3.6 |
| Acciona SA | 3.5 |
| China Datang Corp Renew PwrCo Ltd | 3.5 |
The managers are optimistic, noting that balance sheets are improving and for most sectors there is more rational pricing of equipment.
The lower cost of alternative energy technologies is likely to accelerate the growth of the sector.
Regional weightings in the Guinness fund are 32.5% exposure to China, 13.8% US, 9.7% Spain, 7.9% Germany, 6.7% Denmark, 6.2% Canada, 3.8% Hong Kong, 3.8% Ireland and 15.4% other, holding 0.2% cash.
In the latest factsheet the managers reveal much of the return has come from stocks recovering from distressed situations.
Recently the EU anti-dumping tariffs against Chinese solar manufacturers were dropped, which the managers say is a "great relief" - however, the duo expect the decision to be forgotten as rapidly as the US tariffs on Chinese solar modules.
In a recent report released by Deloitte, Jane Allen, Deloitte Touche Tohmatsu global leader for renewable energy, says: "Global investment into the renewable energy sector is likely to remain subdued in the near term.
"Yet over the long term, the sector will be more attractive, as technology improves and costs decline. In the meantime, investors need to choose their spots wisely, because it's not going to get any easier anytime soon."