Inflows into “green” mutual funds reflect growing investor optimism in renewable energy

The support for renewable energy in the Trump Administration is bipartisan.

U.S. President Donald Trump’s winning last year’s U.S. elections had largely resulted in investors pulling out nearly $68 million from “green” mutual funds, reflecting the belief that his pro-coal agenda could potentially hurt renewable energy companies.

Interestingly, despite Trump’s loud narrative on climate change and his decisions to stall on the Paris agreement, investors are pouring money back in green funds with the net deposits of 22 green funds touching nearly $83 million in the first quarter of 2017, as per Thomson Reuters’ Lipper data.

Investors appear to have renewed their belief that that the Trump Administration will not manage in reviving the climatically dirty coal industry; they also belief that the current administration will not target government subsidies that underpin renewable power, which incidentally has bipartisan support.

The development has sent a positive sign for renewable energies industry, including, wind, solar, as well as to energy efficiency companies.

According to Murray Rosenblith, a portfolio manager at New Alternatives Fund, the coal industry faces problems in the marketplace that are too big for any government to solve.

“Trump can’t bring back coal. There’s nothing that can bring it back,” said Rosenblith.

As per the results of a Reuters’ survey, of the 32 utilities in Republican states, none had planned to increase the usage of coal as a result of Trump’s policies. In fact, many have planned to continue their shift to cheaper, more reliable, renewable energy sources, including solar and wind.

When asked to respond to requests for comment on the Trump Administration effort to boost the coal industry vis-à-vis solar and wind energy, a White House official did not respond to a request for comment.

As per Thomson Reuters Lipper unit, “green” funds are classified as those which have screening or investment strategies that are solely based on environmental criteria.

Midst rising concern on climate change, these funds have increasingly become more popular. They typically tend to draw in younger and more environmentally minded investors who see profits in the burgeoning renewable power industry.

“Solar and wind power are creating a lot of jobs. There is a long-term secular trend taking place,” said Joe Keefe, CEO of Pax World Management LLC.

As per Tom Roseen, Lipper’s head of research, the inflows into green funds may reflect value-shopping since following the Presidential elections, there had been a sell-off in the solar and wind energy sectors.

Importantly, Government subsidies that are the key for the growth of solar and wind industries have bipartisan support in the Republican-controlled Congress. Many Republican lawmakers represent states with burgeoning wind and solar industries, including North Dakota and Texas.

“Most investors are starting to realize that the federal government is limited in its impact and the risk to (green energy subsidies) is relatively low,” said Mike Garland, CEO of Pattern Energy Group Inc.

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