Fund increases exposure to solar power ahead of predicted rally post Copenhagen

Thursday, 17 December 2009 14:05

A sustainability fund that invests in climate change has increased is exposure to solar power stocks in anticipation of a rally after the Copenhagen Summit despite hopes of an agreement fading.

The IM WHEB Sustainability Fund, which invests across the areas of climate change, demographics and water, has added five companies involved in solar power generation, taking its climate change exposure to 40%.

Co-fund manager Nicola Donnelly said it has placed 6% of the fund with companies Wacker Chemie, SMA Solar Technology, Trina Solar Suntech Power Holdings and Centrotherm Photovoltaics.
‘We have been buying stocks that we have had on a watch list waiting for the right time to buy. The industry is at a turning point. It has suffered from excess capacity and a collapse in the price of silicon but now orders are beginning to pick up along the value chain and we are seeing financial stimulus beginning to come through. There is still some excess capacity but we believe that is discounted by the share price,’ she explained.

The decision marks a shift away from the fund's defensive strategy, Donnelly explained. ‘Our exposure to the demographics and water themes provided our portfolio with welcome defensive characteristics in the past few months when climate change stocks have performed poorly, but we think that this theme is going to see a Copenhagen-led rally, she added.

The fund invests globally in companies providing solutions to major global issues such as water resource shortages, climate change and an ageing population. It is based on the premise that governments around the world have responded to the global economic
crisis by committing $2.8 trillion to a global economic stimulus package, of which $430 billion, or 15% of the total global package, is earmarked for the development of green infrastructure.

The fund team believe there is currently a good opportunity to invest in quality, established businesses at the heart of the ‘third industrial revolution’, that of clean energy, water infrastructure, efficient resource use and shifting demographics.