It is not easy being green, as long-term investors in alternative and renewable energy have discovered to their cost.
Green energy has been one of the most touted investment sectors for years, but also one of the most frustrating.
Despite the global push for renewables, and rapid spread of wind and solar power, returns have been volatile. Green principles have come at a price. This is a disruptive sector, but is prone to disruption itself. Clean, green energy is the future – but will it leave your portfolio in the red?
The future is arriving fast as renewables now make up nearly 20 per cent of global energy consumption, according to the Global Renewable Energy Policy Network (Ren21).
Solar photovoltaic, onshore and offshore wind and hydroelectric power plants will make up about 50 per cent of the world’s energy mix by 2050, and 85 per cent of global electricity, DNV GL's Energy Transition Outlook predicts.
It says coal use is already past its peak, while demand for oil is set to flatten from 2020 and plunge after 2028, with gas taking its mantle as the single biggest source of global energy from 2034.
We will see the impact in our homes and also on our streets, with electric vehicles set to achieve cost parity with internal combustion vehicles in 2022, and half of all global vehicle sales electric by 2033.
This is a massive global shift as the world battles to limit global warming to no more than 2 per cent above pre-industrial levels in line with the Paris Agreement.
Yet private investors with green stocks or funds will not necessarily reap the benefit. Hotly hyped new technology can quickly become superseded and too many bright ideas become early-stage burn ups.
Innovative US and European companies are also vulnerable to cut-price emerging market competition, notably from China, whose government-subsidised solar exports have scorched the German solar power industry.
Electric car maker Tesla is the latest green pioneer to look vulnerable. It is now the most shorted stock in the world, as it battles to raise capital to pay debts and fund operations, requiring an estimated $10 billion by 2020, according to Goldman Sachs.
Most private investors will spread their risk with mutual funds or low-cost trackers called exchange traded funds (ETFs) targeting the sector.
Again, performance has been patchy but things are picking up. BlackRock GF New Energy, launched in 2001, is up 58 per cent in the past five years, against 35 per cent for its benchmark specialist fund sector.
The $1bn fund specialises in renewable energy, alternative fuels and energy efficiency. Top holdings include Era Energy, a US and Canadian company that specialises in clean energy, Spanish renewable energy specialist EDP Renováveis, Italian distributor Enel, French multinational Schneider Electric and Danish company Vestas Wind Systems.
Performance elsewhere has been less impressive, for example, iShares Global Clean Energy ETF, which tracks the performance of the top 30 global companies in the clean energy sector, is up just 29 per cent over the same period. Invesco Solar ETF is a fiery fund, falling 63 per cent in 2011 then jumping a whopping 123 per cent in 2013. Measured over five years, it is down 37 per cent.
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Russ Mould, investment director at online trading platform AJ Bell, says alternative energy is a tricky sector despite its massive potential. “Initial adoption could take longer than expected and early movers fall by the wayside," he says. "However, once costs fall to a certain point, mass take-up should suddenly become much more economic.”
Backing the right stock and technology is one challenge, politicians are another. “Regulatory and political interference, such as President Donald Trump’s decision to dump the Paris Agreement, are impossible to predict," says Mr Mould. "So beware any company or industry that is heavily reliant on government subsidies, which can be withdrawn at any moment.”
Mr Mould recommends spreading your risk by investing in a broad-based fund that targets sustainable development and improved environmental, social and corporate governance, such as the Stewart Worldwide Sustainability Fund. This wider remit allows it to invest in mainstream companies pursuing a sustainability agenda, such as consumer goods companies Unilever and Henkel.
Dzmitry Lipski, an investment analyst at online trading platform Interactive Investor, says alternative energy is an exciting opportunity right now as many stocks are trading at a discount to the broader market. “Energy prices are recovering from recent lows and this should further boost demand for alternatives."
He tips Multipartner Sicav RobecoSam Smart Energy, a €650 million (Dh2.77bn) offshore fund based in Luxembourg that invests in “future-oriented energy” such as renewables and energy distribution, management and efficiency. It has performed well, rising 77 per cent in the past five years, according to Trustnet.com.
Mr Lipski also tips Impax Environmental Markets Fund, an offshore fund domiciled in Dublin, which invests in companies seeking cleaner energy, water treatment and waste technology. Top holdings include global logistics company Brambles, Chinese transport specialist Zhuzhou Electric Company and pharmaceutical company Eurofins Scientific. Impax is up 78 per cent in five years.
Alternatively, he tips two passive funds, iShares Global Clean Energy ETF from BlackRock, and the S&P Global Clean Energy Index, which both seek to track the investment results of an index composed of global equities.
Both funds are relative minnows, $141m and $88m respectively, which shows how slow investors have been to turn onto the sector.
Long-term performance has been poor. iShares Global Clean Energy is up just 5 per cent over five years, while S&P Global Clean Energy is down 1 per cent. No wonder the sector has struggled to win over private investors.
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For those brave enough to buy individual stocks, Adam Forsyth, alternative energy research analyst at Cantor Fitzgerald Europe, picks out Simec Atlantis Energy, which he describes as a major UK renewable energy development company with a pipeline of strong assets, including tidal and waste-to-energy projects. “The share price has slipped to around £0.24 (Dh1.13) but we have a target price of £0.75, and it has the potential to go above £3.”
Neil Brown, investment manager on the sustainable investment team fund manager Liontrust, sees opportunities for companies looking to tackle plastic pollution with improved packaging, sustainable alternatives and recycling.
He tips French-based water and waste multinational Suez, British water company Pennon and green technology business China Everbright. “Dutch company Corbion is moving into bioplastics, which have a role to play in making our system more sustainable.”
Mr Brown also tips Smurfit Kappa, Europe’s largest paper packaging producer, which is caught at the centre of the waste debate. “We see strong financial opportunities for those that can do it sustainably.”
As in any radical transformation there will be winners and losers, and incumbent energy companies could struggle if the revolution gathers pace.
Geoff Wan, credit analyst at Hermes Investment Management, says despite Mr Trump’s pushback the US is going green faster than people realise amid a nationwide wide push towards a low-carbon economy and pressure on big energy companies to green their operations.
Energy efficiency measures, such as LED lighting, tighter performance standards for electrical appliances and household insulation, have hit energy demand, sparking a wave of utility supplier bankruptcies and mergers as companies battle to survive.
Nick Stansbury, a fund manager on the global equity team at Legal & General Investment Management, says the global backlash against plastic pollution could also hit the petrochemical and oil industries. "At least eight million tonnes of plastic enter the ocean each year. If current trends continue, there will be the same number of tonnes of plastic in the ocean as fish in 30 years.”
Governments are committed to reducing plastic usage and if global recycling for single-use plastics hits 50 per cent in 2025, this cut could daily demand by the equivalent of 2.5 million barrels a day, he calculates. “Oil demand could peak much sooner, potentially by as much as five years.”
Mr Stansbury says this could also destabilise oil markets: “Investors and oil companies need to start taking those risks more seriously.”
Vijay Valecha, chief market analyst at Century Financial Brokers in Dubai, says the transformation to green energy is irreversible, the big question is how investors can ride it. “The industry is a graveyard of once-promising technologies. It would be prudent to invest in broad themes rather than betting on individual stocks.”
So instead of putting money into Tesla, invest in lithium battery technology, he says. “The electric cars of the future may be powered by lithium and investors can ride this trend by investing in the Global X Lithium & Battery Tech ETF, which spreads risk by invests into an array of lithium producers.”
Mr Valecha also tips Invesco Solar ETF for those wanting exposure to solar or BlackRock’s iShares Global Clean Energy ETF for a wider range of renewables.
Steven Downey, chartered financial analyst candidate at Holborn Assets in Dubai, says investors should approach with caution. “For clients with a strong ethical and environmental disposition, this can be a good way to invest, but beware the hype and the risk of overpaying as this sector is riskier than many realise.”
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Results
6.30pm: Mazrat Al Ruwayah – Group 2 (PA) $36,000 (Dirt) 1,600m, Winner: RB Money To Burn, Tadhg O’Shea (jockey), Eric Lemartinel (trainer)
7.05pm: Handicap (TB) $68,000 (Turf) 2,410m, Winner: Star Safari, William Buick, Charlie Appleby
7.40pm: Meydan Trophy – Conditions (TB) $50,000 (T) 1,900m, Winner: Secret Protector, William Buick, Charlie Appleby
8.15pm: Al Maktoum Challenge Round 2 - Group 2 (TB) $293,000 (D) 1,900m, Winner: Salute The Soldier, Adrie de Vries, Fawzi Nass
8.50pm: Al Rashidiya – Group 2 (TB) $163,000 (T) 1,800m, Winner: Zakouski, William Buick, Charlie Appleby
9.25pm: Handicap (TB) $65,000 (T) 1,000m, Winner: Motafaawit, Sam Hitchcock, Doug Watson
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
UAE currency: the story behind the money in your pockets
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
MATCH INFO
Bayern Munich 2 Borussia Monchengladbach 1
Bayern: Zirkzee (26'), Goretzka (86')
Gladbach: Pavard (37' og)
Man of the Match: Breel Embolo (Borussia Monchengladbach)
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
THE%20SPECS
%3Cp%3EBattery%3A%2060kW%20lithium-ion%20phosphate%3Cbr%3EPower%3A%20Up%20to%20201bhp%3Cbr%3E0%20to%20100kph%3A%207.3%20seconds%3Cbr%3ERange%3A%20418km%3Cbr%3EPrice%3A%20From%20Dh149%2C900%3Cbr%3EAvailable%3A%20Now%3C%2Fp%3E%0A
The specs
Engine: 6.2-litre supercharged V8
Power: 712hp at 6,100rpm
Torque: 881Nm at 4,800rpm
Transmission: 8-speed auto
Fuel consumption: 19.6 l/100km
Price: Dh380,000
On sale: now
Book%20Details
%3Cp%3E%3Cem%3EThree%20Centuries%20of%20Travel%20Writing%20by%20Muslim%20Women%3C%2Fem%3E%3Cbr%3E%3Cstrong%3EEditors%3A%20%3C%2Fstrong%3ESiobhan%20Lambert-Hurley%2C%20Daniel%20Majchrowicz%2C%20Sunil%20Sharma%3Cbr%3E%3Cstrong%3EPublisher%3A%20%3C%2Fstrong%3EIndiana%20University%20Press%3B%20532%20pages%3Cbr%3E%3C%2Fp%3E%0A
Sanju
Produced: Vidhu Vinod Chopra, Rajkumar Hirani
Director: Rajkumar Hirani
Cast: Ranbir Kapoor, Vicky Kaushal, Paresh Rawal, Anushka Sharma, Manish’s Koirala, Dia Mirza, Sonam Kapoor, Jim Sarbh, Boman Irani
Rating: 3.5 stars
The specs
Engine: 2.0-litre 4-cyl turbo
Power: 247hp at 6,500rpm
Torque: 370Nm from 1,500-3,500rpm
Transmission: 10-speed auto
Fuel consumption: 7.8L/100km
Price: from Dh94,900
On sale: now
Company%C2%A0profile
%3Cp%3ECompany%3A%20Zywa%3Cbr%3EStarted%3A%202021%3Cbr%3EFounders%3A%20Nuha%20Hashem%20and%20Alok%20Kumar%3Cbr%3EBased%3A%20UAE%3Cbr%3EIndustry%3A%20FinTech%3Cbr%3EFunding%20size%3A%20%243m%3Cbr%3ECompany%20valuation%3A%20%2430m%3C%2Fp%3E%0A
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Andor
%3Cp%3E%3Cstrong%3ECreator%3A%3C%2Fstrong%3E%20Tony%20Gilroy%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EDiego%20Luna%2C%20Genevieve%20O'Reilly%2C%20Alex%20Ferns%3Cbr%3E%3Cstrong%3ERating%3A%205%3C%2Fstrong%3E%2F5%3C%2Fp%3E%0A
The Great Derangement: Climate Change and the Unthinkable
Amitav Ghosh, University of Chicago Press
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3ETwin-turbo%2C%20V8%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E8-speed%20automatic%20and%20manual%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E503%20bhp%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E513Nm%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3Efrom%20Dh646%2C800%20(%24176%2C095)%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3Enow%3C%2Fp%3E%0A
'Project Power'
Stars: Jamie Foxx, Joseph Gordon-Levitt, Dominique Fishback
Director: Henry Joost and Ariel Schulman
Rating: 3.5/5
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Washmen Profile
Date Started: May 2015
Founders: Rami Shaar and Jad Halaoui
Based: Dubai, UAE
Sector: Laundry
Employees: 170
Funding: about $8m
Funders: Addventure, B&Y Partners, Clara Ventures, Cedar Mundi Partners, Henkel Ventures