Although environmental funds with decent exposure to renewable energy held up well for most of last year, the speed of the deteriation in the global economy suggested that there would be a squeeze on cash for this important sector. Consequently these funds took a hammering towards the end of the year.
Does this mean that the future is bleak for environmental funds? Certainly the oil price collapsing from a peak of nearly $150 a barrel to under $40 hasn't helped and in the short term there seems little likelyhood of oil prices rising with the global economic downturn showing little sign of bottoming.
The doom and gloom for environmental funds has also been given added weight by the argument that what little cash there is will be diverted elsewhere as companies concentrate on survival and entrenchment.
Climate Change may also not be top of the agenda at the moment but job creation is, and the environmental sector offers long term economic benefits. An economy that can look forward knowing that it generates most of it not all of its own energy is an economy that is sustainable. A sector that offers:
- part of the solution to climate change targets
- job creation, and
- energy self-sufficiency
has to be a sector worth investing in, and that is why I am convinced environmental funds have a bright future.
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