The Guinness Alternative Energy Fund gives investors pureplay exposure to global alternative energy markets.

The Fund is managed for capital growth and invests in companies in the solar, wind, hydro, geothermal, biofuels, biomass and energy efficiency sectors. We believe that over the next twenty years the alternative energy sector will benefit from the combined effects of:
  • Improved Economics - renewable energy becoming competitive with power from fossil fuels
  • Valuation - alternative energy equities are undervalued due to poor energy sector sentiment, whilst fundamentals of renewables remain strong due to low cost of installation
  • Long-term growth – corporate, consumer and government interest due to economics underpins long-term prospects
  • Solutions - alternative energy offers solutions to climate change, pollution, and energy security
The Guinness Alternative Energy team has been managing alternative energy portfolios since 2006. The Fund is a long-only equity portfolio of 30 equally-weighted positions. Normally the Fund is invested in companies with a market capitalisation over $100 million.

In brief: why invest in alternative energy?

Alternative energy is competitive
A number of alternative energy technologies are now at a price point where they are already competitive with fossil fuel energy – and alternative energy technologies continue to become cheaper.
Value opportunity
Many stocks in the alternative energy sector are trading at a discount to broad market multiples. The Guinness Alternative Energy Fund can select from a range of stocks with multiples of today’s assets, earnings and revenues that do not reflect the high growth potential of these companies. In addition, companies in the alternative energy sector are often undervalued due to weak energy sector sentiment. The correlation in performance with the conventional energy sector is not always warranted, creating a value opportunity.
Strong growth drivers
Competitive economics of renewable energy; corporate, consumer and government interest due to favourable economics; climate change, pollution and energy security.
Low current levels of alternative energy use
Against a backdrop of ever-lower prices renewable electricity, the speed with which renewable energy can be built and increasing electricity demand from emerging economies, the potential upswing in demand from very low historic levels is an exciting prospect for alternative energy companies and their investors.
Government support
Governments continue to support renewable energy, in the form of subsidies, net metering, priority dispatch of their output and allowing renewable energy projects to compete in the same tenders as fossil fuel plants.

Alternative energy investment case

Value opportunity – unwarranted correlation to fossil fuel prices
A number of alternative energy technologies are now at a price point where they are already competitive with fossil fuel energy – and alternative energy technologies continue to become cheaper.
  1. Alternative energy is competitive

    Alternative energy technologies have reduced significantly in cost since 2010. Solar photovoltaic (PV) panels are now 80% cheaper than they were in 2010, translating into a cheaper electricity source than coal in many parts of the world. Wind power has also decreased in cost, though not as significantly as solar. Nevertheless, wind is one of the cheapest forms of generating electricity and beat coal in tenders for power generation in Chile and Morocco in 2015 and 2016, respectively. Unlike conventional electricity sources, solar PV plants can be built in months, providing an easily-built increase in electricity generation.

  2. Alternative energy continues to decrease in cost

    Although alternative energy technologies have already decreased in cost significantly, the trend for solar and wind shows continued cost decreases, even if at a slower pace from before. Storage technologies – specifically batteries – are now decreasing in cost on a similar path to that which solar PV panels achieved between 2008 and 2013. It is therefore likely that solar and wind power technologies, combined with battery storage, will become competitive in cost with fossil fuels and be able to provide power when the sun does not shine and the wind does not blow.

  3. Interest from corporations, governments and consumers ensures long-term growth

    The price volatility in the conventional energy markets – specifically the gas and power markets – has driven many companies to hedge their electricity prices by either building renewable energy plants or signing long-term contracts to buy power from renewable energy plants for a fixed price. Governments continue to support renewable energy, with increasing support coming from developing countries amid the decline in cost of wind and solar power.

  4. Energy security

    Many countries have to import fossil fuels for their power generators, leaving them at the mercy of international energy prices and exposed to counterparty risk, particularly in developing countries. With much of the world’s fossil fuel reserves lying outside of the OECD, energy security remains a concern. From a political perspective, alternative energy is attractive as the power is then generally generated domestically and does not rely on imports. Alternative energy also reduces the exposure to fossil fuel commodity price risk that most countries face.

  5. Climate change

    The Paris agreement at the United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties in 2015 confirmed that world leaders accept that reducing greenhouse gas emissions is necessary to avert disastrous global warming. This acknowledgement indicates longer-term support for alternative energy sources.

  6. Pollution and health concerns

    The global population is becoming increasingly urban. Local air pollution has quickly become a serious issue

Fund Manager

Edward Guinness

Edward joined Guinness Asset Management in January 2006. He is manager of the Guinness Alternative Energy Fund and a fund manager in the Guinness EIS Team.

Prior to joining Guinness Asset Management, Edward worked from 2002 as a merger arbitrage analyst for the Arbitrage Associates Fund at the Tiedemann Investment Group in New York. In 1998 he joined HSBC Investment Bank, where he worked in the Corporate Finance Department in the Energy & Utilities Team and in the Telecoms & Technology Team. Edward graduated from the University of Cambridge with a Master’s degree in Engineering and Management Studies.

Investment process

Our stock selection is driven 50% by our top-down views and 50% by bottom-up stock analysis. The top-down views shape our energy sub-sector allocation, whilst bottom-up analysis is designed to identify the best stocks to populate our sub-sector allocation. The investment team applies a mixture of value and growth investing, with a bias towards value.

Key alternative energy equity sub-sectors
SolarWind
HydroelectricityBiomass
BiofuelsEnergy Efficiency
Geothermal

Top-down views

We conduct rigorous independent analysis of the fundamental drivers of alternative energy markets: energy commodity prices; alternative energy technology research and development; installation and equipment prices; political and economic support for the sector; government and private sector demand. This allows us to analyse likely demand for alternative energy equipment and services and creates our top-down view, which in turn informs our industry energy sub-sector allocation.

Guinness stock screening
QualityReturn on investment
ValuationRelative to peer group and history
EarningsAnalysts’ earnings forecast revisions
MomentumPrice movements versus peers

Bottom-up stock screening

The team operates a disciplined stock screening process. We review a universe of around 206 energy stocks each week to identify companies which look attractive on their return on investment, valuation, earnings sentiment and price momentum. Other sub-sector specific screens are also employed to generate ideas.

Stock due diligence

Stock ideas are taken from our screens. We then conduct due diligence to establish whether we have conviction to include the stock in our portfolio. The due diligence centres around detailed financial modelling.

Portfolio construction

Equally-weighted portfolio

The portfolio comprises around 30 equally-weighted positions. Our equally-weighted portfolio construction is designed to create a balance between maintaining fund concentration and managing stock-specific risk. It also imposes a structural sell discipline: an existing position must be sold to purchase a new holding.

Sector weights

There is no benchmark adherence in the Fund’s sub-sector weights.

Portfolio risk controls

Stock specific risk

Stock specific risk in the alternative energy sector tends to be higher than the broader market. By constructing the fund of 30 equally weighted positions, we avoid significant exposure to any one individual stock.

Emerging market exposure

There are no limits to emerging market exposure.

Liquidity

The portfolio is liquid, with 90% of the Fund normally invested in companies with a market capitalisation over US $100 million.

Currency

The Fund is not hedged from a currency perspective.

Fund Alternative Energy Fund Date (period end) 31.07.2017
Clean Energy Index Wilderhill Clean Energy Index Fund Launch 19.12.2007
New Energy Index Wilderhill New Energy Global Innovation Index Basis Total return, in USD

Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency movement, and you may not get back the amount originally invested.

Cumulative performance (USD, %)
B class (OCF: 1.99%) Year-to-date 1 year 3 years 5 years From launch
Fund 14.42 7.14 -27.53 45.68 -75.99
Clean Energy Index 23.77 16.16 -27.28 16.26 -81.66
New Energy Index 18.28 14.29 0.80 93.94 -50.09
Annualised performance (USD, %)
B class (OCF: 1.99%) 1 year 3 years 5 years 10 years From launch
Fund 7.14 -10.17 7.81 - -13.78
Clean Energy Index 16.16 -10.07 3.06 -14.03 -16.16
New Energy Index 14.29 0.27 14.16 -5.61 -6.97
Calendar year performance (USD, %)
B class (OCF: 1.99%) 2012 2013 2014 2015 2016
Fund 70.80 -12.05 -12.04 -15.44 14.42
Clean Energy Index 58.54 -16.93 -10.36 -22.12 23.77
New Energy Index 55.70 -2.16 1.51 -6.43 18.28
Discrete year performance to date (USD, %)
B Class (OCF: 1.99%) 12 months ending: Jul-13 Jul-14 Jul-15 Jul-16 Jul-17
Fund 75.12 14.79 -20.02 -15.43 7.14
Clean Energy Index 47.89 8.10 -21.37 -20.38 16.16
New Energy Index 53.48 25.36 -6.17 -6.00 14.29
Source: Bloomberg, bid to bid basis, total return. The Fund also has Sterling and Euro share classes available for investors.

Press

Investment Week | Oct '16

Is now the best time to access energy stocks
Samira Rüdig-Sotomayor discusses the Bull and Bear issues in the Alternative Energy sector

FT Adviser | Aug '15

Fund review: “things could be looking up”
FT Adviser’s Philip Scott profiles Edward Guinness’s Alternative Energy Fund.

Money Week | Jul '14

How might renewables change the face of energy?
Edward Guinness joins Money Week’s panel of experts discussing how investors can profit from the growth in renewable energy.

CNBC | Jun '14

VIDEO: How to be a winner in solar
Edward Guinness tells CNBC that solar remains a “high-growth area” and discusses how to invest in the sector.

Investment Week | Mar '14

Alternative energy recovery only just starting
Edward Guinness says alternative energy is only just starting to recover properly from the 2008 crisis, creating opportunities for investors.

Guardian | Feb '14

Windfall profits for 2013’s best fund

Patrick Collinson discusses the Fund’s power-packed returns from wind and solar investments

Blue & Green Tomorrow | Jan '14

Meet the manager of the 2013’s best fund
This Fund delivered returns that surpassed the entire UK fund world.

Citywire Global | Dec '13

Citywire profile: Power player returns to form
Alternatives expert Edward Guinness has been through the mill, but is now hitting a sweet spot

Seeking Alpha | Mar '13

A roaring return in alternative energy
Edward Guinness discusses the sector with Seeking Alpha

Insights

Mar '16

Gas vs Renewables
Edward Guinness and Samira Rudig discuss the effect of low fossil fuel prices on renewable technologies

Mar '14

Prospects for Alternative Energy
Edward Guinness discusses performance and prospects for alternative energy investing

Fact sheets
For information on the Fund’s current investments, please see the latest fact sheet: English French German Italian
Key facts
Launch date 19/12/2007 Pricing Daily, forwards
Fund managers (start date) Edward Guinness (19/12/2007) Valuation 2300 Dublin time
Benchmark Wilderhill Clean Energy Index;
Wilderhill New Energy Global Innovation Index
Deal cut off time 1500 Dublin time
IA sector IA Global Year end 31 December
Structure OEIC (UCITS) Administrator Capita Financial Administrators (Ireland) Ltd
Domicile Ireland Custodian JP Morgan Bank (Ireland) plc
Underlying currency US Dollar UK Reporting Fund status Yes
Redemption fee 2% within 30 days of purchase ISA Eligible Yes
Share classes
1.24% OCF 1.49% OCF 1.99% OCF
Currency USD GBP USD EUR USD GBP EUR
Accumulation or Distribution Acc Acc Acc Acc Acc Acc Acc
Name E X A D B C C EUR Acc
Initial charge 0% 0% 0% 0% 2% 5% 5%
OCF*
(Total ongoing charges p.a.)
1.24% 1.24% 1.49% 1.49% 1.99% 1.99% 1.99%
Minimum direct investment $10,000,000 £5,000,000 $200,000 € 100,000 $1,000 £1,000 € 1,000
Minimum platform investment Guinness Asset Management minimums do not apply. Platforms apply their own minimum investment levels.
ISIN Code IE00B3CCJ856 IE00B7LWDH14 IE00B2PGVJ29 IE00B3CCJ740 IE00B2PGVK34 IE00B3CCJ633 IE00BGHQF417
SEDOL B3CCJ85 B7LWDH1 B2PGVJ2 B3CCJ74 B2PGVK3 B3CCJ63 BGHQF41
Bloomberg ticker GUINAEE ID GUINAEX ID GUINAEA ID GUINAED ID GUINAEB ID GUINAEC ID GUINECE ID
Country registrations UK, CH, LUX, FIN, SGP
*OCF = Ongoing Charges Figure, which includes the annual management charge.

Country codes

UK
United Kingdom
CH
Switzerland
LUX
Luxembourg
FIN
Finland
SGP
Singapore (professional only)
GER
Germany
FR
France