Calvert Global Alternative Energy

The global financial crisis has hit hard the fund management sector, including the ethical segment, or Socially Responsible Investment (SRI) sector. This category includes alternative energy funds. Among the funds whose performance was dampened by the crisis was the Calvert Global Alternative Energy. It returned -33.9% in the fourth quarter of 2008. Founded in May 2007, Calvert Global Alternative Energy Fund managers scour the market to find companies with a sustainable, competitive advantage in their respective categories and industries. Calvert Global Alternative Energy Fund invests in ways consistent with Calvert�s philosophy that long-term rewards to investors come from companies whose products, services and methods contribute to a more sustainable future and meet the strictest standards of sustainability.

According to Calvert, a combination of factors such as wide-scale de-leveraging across real asset classes (equities, commodities, property and hedge funds) and a steep fall in the price of crude oil drove the losses of the Calvert Global Alternative Energy fund. The company remains optimistic for Calvert Global Alternative Energy, though, as support for renewable energy will remain strong during the Obama administration, despite sustained market volatility for renewables. In terms of strategy, it has a preference for wind power and has reduced weighting to solar. It has also reduced the weighting to fuel cells, biomass and miscellaneous energy sectors. The company says the solar power sector was among the biggest performance detractors over the period. This is because the economic crisis coupled with the lack of funding led to fears that demand for solar panels in the next few years will be less than anticipated, leading to falling solar module prices.

In terms of stocks, Calvert Global Alternative Energy has seen a cut to its exposure to companies that need to raise capital to finance aggressive capital expenditure plans or refinance debt, such as Evergreen Solar and Theolia. Instead, Calbert is focusing on companies with strong cash flows, defensible business models, and strong balance sheets that are better-positioned to weather the recession.

To put it in a nutshell, the forecast for the Calvert Global Alternative Energy remains mixed as volatility is expected. According to the fund manager, while political support for the sector worldwide keeps building momentum, company news is still expected to be negative in the short term. Investors could easily get carried away by the announcements of infrastructure investment packages, but these are not likely to happen until the second half of 2009 at the earliest.