How is Clean Tech Different From Green Tech
By Bernz Jayma P.

The concept of “clean tech” is a response to the projected population growth on the planet, which is estimated to be 2.3 billion people by the 2050. The theory is that clean tech companies, which address environmental sustainability as part of their overall business strategy for profitability, will be the model that successful companies will have to use in order address the increasing demand for food, clothing, shelter and other scarce resources that will only increase as incomes rise across the globe.

Where “green tech” evolved in the 1970s from government controls intended to mitigate the effects of manufacturing and agricultural pollutants on the environment, “clean tech” is built into the business model from the very beginning. Green tech has traditionally always seen as an expensive, but required, drain on a company’s profits. Clean tech is built into the business strategy as an acknowledgement that resource scarcity and pollution exist and must be addressed when planning profitable strategies. It is a long the same lines as when a business incorporates the cost of paying office rent or the cost of purchasing manufacturing materials into its overall budget.

Also, there are some products which are included in green funds which would never be included in a clean fund, such as ethanol. Where an alternative energy fund would include a company which produces ethanol in its fund because ethanol is considered to be an alternative to petroleum based fuels, a clean tech fund would not include an ethanol-producing company in its portfolio because of it’s net carbon effect. Ethanol production requires so much petroleum based fuel in order to grow the corn and process it, that there is negligible positive effect on the environment for using it.

Green tech Exchange Traded Funds (ETFs) tend to focus narrowly on a single business sector, like energy, manufacturing or recycling. As a result, green energy Exchange Traded Funds can be extremely volatile and sensitive to fluctuations in the price of oil. Clean tech ETFs have not been so volatile (although, in fairness, they have only been around since the Clean Tech Index was created in 2006, so there is not a long history to track). Clean tech companies exist across a broader range of business sectors like agriculture, manufacturing, transportation and new materials. As a result, clean tech Exchange Traded Funds have seen a more stable performance, comparable to the returns from the S&P 500 Index.

Author and entrepreneur Bernz Jayma P. is the owner of a financial blog dedicated to helping people expand their knowledge on personal finance. You may visit his blog at http://www.Invesmint.com.

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Energy ETFs - Alternative Energy is Hot
By Ryan Moxie

With today’s economy, commodity ETFs (exchange traded funds) are the investment to watch. Energy ETFs are among the most popular of the commodities. Energy exchange traded funds include crude oil, coal, natural gas, and even gasoline. Alternative energy ETFs are now making their way into our hearts. These include solar energy, wind energy, and nuclear energy. Even water resource energy is now being sold. Why are alternative energies growing so popular?

Most energy ETFs are futures. This means that they watch the future prices and resources of the energies. For example, oil and gasoline are futures. These energy ETFs depend on the future prices of a barrel of oil as well as how much oil is being made and stored. In other words, will there be enough supply to meet the demand. If the prediction is that there won’t be enough, then the obvious follow up is that gas prices will continue to rise. Therefore, anybody owning these energy exchange traded funds are likely to make money on them.

Natural gas energy exchange traded funds are futures that depend on the prediction of the need for this energy. If Congress passes the energy bill the need for clean energy will be high and natural gas is sure to be in high demand.

Solar energy ETFs are one of the more popular of the alternative energy exchange traded funds. Solar energy is a renewable source and current science tells us that it is impossible to run out of. So if the lack of resources isn’t going to drive up the price, then it must be demand. The demand for solar energy is increasing every day that people learn about greenhouse gasses and what it is doing to our planet. The more people who want solar energy, the higher the demand, and the companies that provide solar energy solutions will make more money - as will the solar energy ETF holder.

The popularity of wind energy is growing and that is why the new wind energy ETFs are gaining in popularity, too. The exciting thing about wind energy is that one megawatt of wind energy produced from a turbine (windmill) will generate energy for 380 families. If wind energy is utilized in all of the continental United States, 20% of our energy needs will be taken care of by a natural resource that is always there. I took a drive out west a few months ago and was amazed at how the rural communities in western United States are taking the hint. These turbines are everywhere in some places and the trend seems to be moving east. Now is the time to get in on wind energy exchange traded funds.

There are alternative energy ETFs that bundle alternative energies together. These include solar, wind, nuclear, and soon to be water. While some analysts advise that investors wait for the alternative energy ETFs to level out before buying due to the volatility of the funds, other analysts are saying this is the time to buy in energy commodity ETFs.

Ryan helps you understand ETF commodities and shows you how to profit from energy ETFs.

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How to Use ETFs in Your Portfolio
By William Sinclair

Exchange Traded Funds, or ETFs, have revolutionized the way individuals can now invest. Rather than a traditional mutual fund, these are mutual funds that are on a stock exchange that look, trade, and work just like stocks.

There are several advantages with ETFs over mutual funds:

• They trade instantly, there’s no waiting for the day’s closing price at 4 p.m.
• You can buy or sell them with limit orders and place stop loss orders on holdings to protect your investment from a large drop
• Many are offered that give you double or triple the underlying index value’s daily change, so you have additional leverage with your money
• Many allow you to short either a market index or a stock sector
• You can buy them in an IRA or 401k and thus can short stocks that way, benefitting from falling prices with a rising price in the short ETF. You cannot short stocks in a retirement account, because if they move against you (up), you would owe additional funds.
• You can use a sector specific ETF to hedge stock positions by providing some insurance against an opposite move in those

Traditional mutual funds don’t allow any of these, you can’t have a preset sell price, or stop loss order, you can’t buy at a specific price, you don’t get the immediate value when you buy or sell. On Black Monday in 1987, when the market plunged at the open, those who sold mutual funds had to wait until the 4 p.m. prices, which was at the day’s lows, down over 20% on average for that day alone. People, like me, who sold stock at the open had their cash immediately and avoided the day’s plunge. Traditional funds will usually cost more in fees when you get out than an ETF, which will trade at the cost of a stock trade’s commission.

You can use ETFs for various investment purposes:

• You can use them alone for investing rather than trying to pick individual stocks
• You can buy into or short an entire sector, such as financials or real estate, with one trade
• You can use them to hedge stock positions, such as using a financial short ETF to protect a long position in financial stocks, or a short index ETF to protect all your long positions at once
• You can buy the entire market with a broad index fund, such as the S&P500 or Russell 2000, or short the market the same way
• You can lessen your risk because there’s no chance of bankruptcy or a bad earnings forecast such as may occur with individual stocks
• ETFs allow beginners to safely learn how to trade while remaining diversified without having to analyze individual stocks

ETFs have succeeded because of all these advantages. Most now trade millions of shares per day, and I would avoid those that still trade below 100,000 shares daily, which is called liquidity; you only want to trade liquid stocks. For beginning investors, these offer the safest way to learn how to trade the stock market with the least risk. Simply buy a long or short S&P500 or Dow 30 fund, put in a stop loss order to protect yourself from a big loss, and you have easily started down the road to safer investing.

William Jose Sinclair
Find any ETF you may need at http://etfguide.blogspot.com
Find more stock trading wisdom from 30 year traders at Pro Stock Traders http://prostocktraders.blogspot.com

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Energy ETFs - The Way of the Future
By Jonathan Gibson

In today’s volatile economy, ETFs (exchange-traded funds) are the investment instruments to watch. Energy commodities ETFs are among the most popular investments to posses. There are many types of Energies exchange-traded funds: coal, crude oil, gasoline and natural gas. The alternative forms of energy are also available forms of Energy commodities, including solar, Wind and nuclear energy.

These energies Exchange-Traded funds depend on the future prices of energy as a whole so they’re affected by political conditions, fluctuation in supply and demand, weather conditions and more things.

As futures, natural gas energy ETFs depend on the need for this energy; or rather they depend on the predictions of such a need. Therefore, it is dependent on supply and demand. If an energy bill for regulations on Natural gas is passed, the need for clean energy will be high and natural gas is sure to be in high demand. In fact, such laws have already been passed in Europe.

One of the most popular forms of alternative energy exchange-traded funds is solar energy. The need and demand for solar energy increases everyday as we look for alternative power sources. With rising oil prices, it is highly likely that companies who deal in solar energy will continue to rise in value. Whether it is to help power a building and /or Automobile, solar energy is in high demand. Some companies who provide solar energy and their shareholders have seen an increase in revenue.

Wind Energy is one of the most exciting fields for investors in energy ETFs. The popularity of wind energy is increasing and it is the one of the newest types of ETF available. The energy that wind produces from a turbine can power 380 families with one megawatt of wind. If wind energy is utilized to its potential for the continental United States, 20% of our energy needs will be taken care of by a natural resource that is always in abundance.

The alternative energies bundled together can provide all the power our society needs. These include nuclear, wind, solar, and soon water. While some analysts advise that investors bide their time for the alternative energy ETFs to level out before buying due to the volatility of the funds, other analysts are saying this is the right time to invest in energy commodity ETFs. Either way energy exchange trading Funds is the way to go in the future.

To read more about making money with ETFs, click here: ETF trading Tips.

Jonathan Gibson makes his money from home and has an extensive experience in market trading. To get a Free blueprint on trading ETFs on trading from a 30+ year trader veteran, click here: ETF Trading Blueprint.

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Green Investing - The Gold Rush
By E. O’Brien

Green investing is growing up. Previously the province of a small number of investors who chased an even smaller number of companies, the market for environmental technology has expanded dramatically in recent years. And it has captured investors’ wallet share along the way. Inflows into green funds totaled $766 million for the year ending May 31, according to Morningstar, compared with $37 million in net outflows from religious funds over same time period. (Morningstar tracks these two subcategories under the umbrella of socially responsible investing, or SRI, funds). “The interest has turned from ‘maybe I’ll dabble in this’ to ‘this is an asset class I should include in my portfolio,’” says Jerry Moskowitz, president of FTSE Americas.

Surging fuel prices have helped make green technology one of the biggest equity growth areas in the U.S., says John Quealy, a green tech analyst at Canaccord Adams, an independent financial services firm in Boston. New products are keeping pace. Mutual funds represent the largest share of socially and environmentally screened funds, with $171.7 billion in total net assets invested across 173 different funds, according to the Social Investment Forum’s 2007 Report on Socially Responsible Investing Trends in the United States. Exchange-traded funds accounted for only 1% of the total assets of all socially and environmentally screened funds at the beginning of 2007, but their ranks are growing daily.

The source of investors’ fascination is, of course, the need to find alternatives to oil and other fossil fuels in today’s environment of scarcity and climate change. We’ve reached a point where environmental technologies have moved way beyond good wishes for Mother Earth, and are starting to make economic sense. Alternative energy has finally captured businesses’ and investors’ imaginations and the gold rush is on-and so are nascent fears of a bubble.

Oil prices of $140 or more per barrel highlight the scarcity-or at least, the fears of scarcity-of this hot commodity. Global demand for oil will only increase over the short term, even if record gas prices finally cause Americans to curb their consumption.

China and India are expected to more than double their energy use by 2030, according to the International Energy Agency. Increasing demand for fossil fuels pushes their prices up, which in turn spurs technological advances across all alternative energies. The world will continue developing better ways to power cars (the next iteration of the Toyota Prius, the ragingly popular gas sipper, will come with solar cells that help run its air conditioning), as well as alternatives to coal and other greenhouse gas emitters. Industry experts say that oil would have to drop back down to $50 per barrel for alternatives like solar, wind and geothermal energies to lose their economic viability.

Here’s a closer a look at the opportunities, and some potential risks, in green investing.

Clean and Green

Investors considering environmental tech should start by defining their terms. For example, some use “clean tech” and “green tech” interchangeably, while others make a clear distinction. Jack Robinson falls into the latter group. The manager of the $410 million Winslow Green Growth Fund-whose three-, five- and 10-year performance has bested the Russell 2000 Growth Index-defines green companies as those involved in a bona fide, sustainable solution to global warming or other environmental ills; clean companies, in his parlance, are environmentally neutral. One clean company that Winslow holds in Green Growth is Bankrate, a North Palm Beach, Fla.-based online consumer banking and personal finance network. A green company he owns is Green Mountain Coffee Roasters, a Waterbury, Vt.-based purveyor of fair trade organic coffee that is carbon-neutral and donates 5% of its earnings to earth-friendly causes.

Investors must also decide for themselves what constitutes a green company. Quealy identifies four subcategories within the green sector: energy and power technology, which includes fuel cells; water technology; recycling technology; and bioresource technology, which includes ethanol. However, many so-called green companies don’t draw 100% of their revenues from green activities. Purely returns-driven investors may not care to know the full scope of a company’s endeavors, but those who see themselves as socially responsible will. “If you’re large enough, you’re going to be doing things some people don’t like,” says Peter Kinder, president of KLD Research & Analytics, a Boston-based social research and index firm.

Robinson won’t hold companies that are at all “dirty.” For example, he won’t own BP, even though the British oil company is also developing alternative energies. Don Rogers, executive director of Virginia United Methodist Pensions, won’t invest in conglomerates with more than 10% of their income from any combination of alcohol, firearms and gambling. Green investors also line up on different sides of the nuclear power divide, with some embracing the technology as an attractive alternative to fossil fuels and others shunning it as expensive, a cause of toxic waste and prone to accidents or terrorist attacks.

The growth of green tech investment vehicles mirrors the increase in individual companies in the space. When Robinson first began investing in the category 15 years ago, he had only a handful of stocks to choose from. These days, he says, “the universe has expanded dramatically and a lot of the small caps have become mid-caps or even large caps.” One stock that graduated from small cap to mid-cap on Robinson’s watch is Itron, a Liberty Lake, Wash.-based company that produces electricity, gas, water and heat meters. When Robinson first invested in the company in early 2006, its market cap was under $1 billion, and today it’s about $3 billion.

The Al Gore Effect

Many credit Al Gore and his 2006 Oscar-winning movie, An Inconvenient Truth, for the uptick in consumers’ desire to go green. “He’s had a major impact on educating the public,” Robinson says. And today, more consumers are gaining access to green mutual funds through their 401(k) plans, he notes.

Christopher Manning, a financial advisor in Houston who focuses on SRI, says alternative energy investments are the most popular SRI category among his new clients this year. He uses Green Century mutual funds with his clients, as well as two PowerShares ETFs, Global Water and WilderHill Clean Energy.

Before he launched his own SRI-focused firm in 2005, Manning worried about how it would play deep in oil country. While he hasn’t encountered any outright hostility toward his mission, he says, he has found plenty of educational opportunities among potential clients. He’s also found himself quite a niche. “In this area, I’m the only game in town” for clients interested in SRI, Manning says.

Justin Harris, a financial advisor in Seattle, says few of his clients come in with specific requests about green investing. Most request a general negative screen that weeds out tobacco, gambling and alcohol stocks. While many advisors adopt SRI vehicles at their clients’ request, Harris went the opposite route: About seven years ago he set a mandate that all assets his clients invested with him would be in socially responsible investments. “I saw I wasn’t gaining anything by divorcing my money from my values,” he says. Harris didn’t lose any clients as a result of the mandate, and clients embraced the cause. “I find that people really want to be fully engaged,” he says. “They want to walk their talk.”

Policy Watch

As with so many issues in this election year, market watchers wonder how the new occupant of the White House will affect green technology next year and beyond. Both the presumptive Republican and Democratic nominees, John McCain and Barack Obama, respectively, support a cap-and-trade system for carbon emissions, so it’s likely this initiative will move forward regardless of the election’s outcome. A system adopted by the European Union several years ago, a cap-and-trade system creates market incentives for reducing carbon emissions. Companies are allotted a certain number of permits to release carbon gases, and if they can figure out a way to reduce their emissions, they can sell their excess permits for cash.

When investing in individual securities, investors can analyze how well companies are preparing themselves for these coming regulations, says Todd Larsen, spokesman for the Social Investment Forum, a trade association of the U.S. social investment industry. Companies will incur greater costs as a result of cap-and-trade regulations, and they will pass these costs along to their customers. For example, a one-cent increase in the cap-and-trade cost per ton of carbon translates into a 33% increase in the end consumer’s electricity costs, Robinson says. Investors interested in carbon as a commodity also have expanding options: In June, Barclays launched the first exchange-traded note offering investors pure exposure to the global price of carbon.

Many assume that a Democratic administration will be friendlier toward SRI principles. For example, conventional wisdom holds that Obama would be more likely than McCain to increase incentives for environmentally friendly corporate behavior. But in some ways, among individual investors the opposite may hold true. “SRI is demand-driven, and there’s nothing like a Republican president to drive demand,” says one prominent industry participant who requested anonymity for fear of being perceived as cynical. Indeed, frustration at President George W. Bush’s dismal environmental record has contributed to the popularity of alternative energy investments in recent years.

Investors or Believers

While the next occupant of the White House may affect certain environmental policies, SRI and green investing has enough momentum that it should make progress no matter who wins this November. “There has been a sea change at work,” says Calvert CEO Barbara Krumsiek. Corporations have embraced positive change on environment, social and governance issues (also known as “ESG”), she notes. Large institutions like public pension funds have taken up SRI investing, including shareholder advocacy, and investors are expressing unprecedented interest in SRI, Krumsiek continues.

Calvert doesn’t track how many of its investors are purely returns driven, as opposed to those who invest according their beliefs, but Krumsiek believes that both groups are well represented among her shareholders. The venerable SRI fund family ventured into the green tech space last year with the launch of the Calvert Global Alternative Energy Fund. The fund was down 12.1 % as of June 30, negative 0.2 points below Standard & Poor’s 500 results for the same period, according to Morningstar. Calvert plans to launch a Global Water Fund in the third quarter.

Bill Crager, president of Envestnet, a Chicago-based provider of investment management products and services, envisions a day when information on companies’ environmental, social and governance track records will become more readily available. One day, he predicts, clients might receive, along with their quarterly returns statement, a statement of their holdings’ sustainability efforts. This could take the form of a report on individual companies and how they help or hurt the planet during that time frame, by opening up a water filtration plant, say, or by polluting a local river, Crager says. Envestnet’s products include Veris Sustainable Strategies, mutual fund portfolios for socially conscious investors.

Potential SRI investors will invariably ask whether investing with their hearts-and their attention on ESG reports rather than earnings reports-will damage their wallets in the form of lower returns. “My experience is all investors are returns driven,” says Dan Porter, founder and vice president of marketing for IW Financial, a Portland, Maine-based provider of environmental, social and governance research, consulting and portfolio management solutions. “When I want to incorporate my values, the question is, can I do that at an acceptable level of cost?” The answer will vary from client to client.

Ready to Boil?

Only a handful of green mutual funds and ETFs tracked by Morningstar have even a five-year track record. “The jury is still out about performance of SRI funds in general,” says Stephen Horan, head of private wealth and investor education at the CFA Institute. “Both sides can cite studies to support their case.” Not surprisingly, of those that do, some have underperformed and others have outperformed the broader market. Those in the latter category include Winslow Green Growth, with 11.2% five-year returns as of June 26, compared with 7.4% for the Standard & Poor’s 500; and the New Alternatives Fund, which invests in alternative energy and boasts an 18.1% five-year return as of June 26, according to Morningstar.

Outsize returns like those may prompt the question of whether alternative energy is entering bubble territory. It’s never an easy question to answer. “If it pops, we’ll know,” says Johann Klaassen, vice president of managed account programs for First Affirmative Financial Network, an independent investment advisory firm in Colorado Springs, Colo., that designs green investment portfolios. That said, Klaassen believes alternative energy is still in “the opportunity phase.”

Robinson says solar companies got “priced to perfection” recently but have since receded from their highs. It would be wrong to avoid the category altogether, he says: “Long-term, solar is a part of the solution.” Oil prices will not likely make a big retreat, he believes, and demand for alternative energy sources will only grow.

After all, it’s not as if the world will stop using energy. FTSE’s Moskowitz says green tech companies are reporting solid earnings that are reflected in FTSE’s environmental indexes, the FTSE ET50 and the FTSE Environmental Opportunities All-Share Index. “They don’t look wild,” Moskowitz says of his indexes’ components.

Even so, green tech investors must have a strong stomach to weather the sector’s volatility. Some of that volatility comes from the fact that most green tech stocks are small-cap growth companies, which are among the most mercurial. In addition, Quealy says, “We live in an unbelievable bull market for commodities, where geopolitical discussions swing the price of oil two to three bucks daily.” This adds another layer of volatility to green tech stocks that other sectors don’t share, he notes.

Quealy still thinks green tech companies rank among the best secular growth opportunities for the next five to 10 years. Stock pickers would do well to study the management, market and marketable technology of the companies they’re considering, instead of blindly investing in the sector as a hot growth prospect, he advises. “The passive investment approach is likely to be a risky one as Wall Street decides who the winners and the losers are,” Quealy says.

Jan Bryan, a planner specializing in SRI out of Prescott, Ariz., reports that while her clients expect competitive returns from their investments, these long-term investors also understand and accept cycles of underperformance. For example, when defense and big oil are doing particularly well, portfolios that eschew them will miss out on those gains. Her clients have found other kinds of rewards in SRI and green investing. “Clients absolutely love it when you ask them their views on social issues,” she says. “They feel respected and heard, and these are the most loyal clients.” Klaassen also notes the phenomenon of “sticky clients” in the space: “They get invested in us, as well as with us.” First Affirmative does get some returns-driven investors, but they generally don’t stick around for long. “Hot money flows in and flows out,” Klaassen notes.

Elizabeth O’Brien is an author with Financial Planning magazine. For more information, please visit http://www.financial-planning.com

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