Power-packed returns as wind and solar power nets Guinness Alternative Energy 11% gains
Wind farms off Britain's shores are being cancelled almost weekly. Hard-pressed governments across Europe are slashing subsidies for solar power and other renewable projects. Yet what was the best investment fund to put your money into in 2013? An alternative energy fund invested in wind turbines and solar cell makers, which turned £1,000 at the start of the year into £1,680 now.
Guinness Alternative Energy jumped 68.8% over the year, the best performance of the nearly 3,000 funds on the market which, on average, made gains of around 11%. One of Guinness's biggest holdings is Gamesa, a Spanish wind turbine maker. Its shares started the year on the Madrid stock exchange at €1.73 but have more than tripled, trading this week at €7.21.
But as Edward Guinness, manager of the fund, acknowledges, this is a story about recovery from near disaster. As recently as September 2009, Gamesa was trading at €16.50, so it is still less than half the price it was. His holding in Renesola, a Chinese maker of solar cells, has followed a similar path. Its shares are traded in New York where, in 2010, they were changing hands at $13. Over the last year they have nearly doubled – from around $1.50 to $3 after nearly collapsing in 2011, hit by rampant over-capacity and falling prices.
Early investors in Guinness Alternative Energy are still nursing large losses, with its unit price 60% below the launch. "We're just turning the corner, but we still have a hole to dig out of," admits Guinness. But he's confident that investors in alternative energy have a bright future. "The medium to long-term story is very good. The cost of solar installations has fallen dramatically, and you are seeing a move from heavily-subsidised markets in Europe to countries which can now operate solar plants that will be able to work without subsidy," he says.
But the major surprise this year is that the best gains for investors have not come from emerging markets, but from small companies much closer to home. The average UK smaller companies fund earned investors 35% this year, and that comes after a terrific run over the past five years.
If you'd put £1,000 into the average fund in the sector five years ago, it would now be worth £3,000. Compare that to the people who trusted the likes of China and south-east Asia with their money; the average emerging markets fund actually lost money in 2013, and over five years has returned around 76%, or less than half the money that British smaller companies made for investors.
Praise has to go to River & Mercantile, a relatively small fund manager, which managed to get two of its funds into the top five across the year (out of 2,985), both of which are focused on either UK small companies or recovery stocks. Investors who have held them have pocketed gains of 220-250% over the past five years. Mark Thomas of R&M says the firm operates a "potential, valuation and timing" strategy when picking stocks, which has paid off across its range of funds. He cites ITV as a typical "recovery" stock. "We bought it in 2008 when it was trading at around 32p. No one else wanted ITV at the time – they thought broadcast television was dead, but they hadn't counted on Downton Abbey or the X Factor, and how broadcast television is still sought after by advertisers." R&M has now sold its holding in ITV, which has gone up in price fivefold since 2008 and is trading at around 180-190p.
So is it too late to buy UK smaller company shares? R&M thinks there is still value to be found, but adds that European smaller companies may have better immediate prospects, as the continent follows Britain out of the recession.
"In Europe there is a very similar stock to ITV. It's called Mediaset and, yes, it's head is Silvio Berlusconi. Everybody hates it as a share, but we think it's like ITV three or four years ago."
Shares in Mediaset, the biggest commercial broadcaster in both Italy and Spain, and which owns Endemol (makers of Big Brother), are less than half the level they were trading at three years ago and a fraction of a decade ago.
The major fund management groups are largely tipping Europe and Japan as the best bet for stock market returns in 2014. Both are "recovery" stories after many years of disappointing returns, and are regarded as cheaper than stock markets where economic recovery is more evident, such as the US and UK. Europe is the region most widely expected to outperform in 2014, a survey by the Association of Investment Companies showed, also coming top in Merrill Lynch polls of fund managers every month since September. But Fidelity Investments warns investors that the eurozone's problems are far from solved. It sees inflation heading towards zero or even negative in some parts of the continent, which will make it difficult for countries such as Italy to service their debt mountain, while some banks remain a worry.
Emerging markets such as China, Brazil and Russia look cheapest on most valuation measures, but the big investment houses are cautious. Next year is likely to see the fabled 'taper' come into operation. Many think that as the Federal Reserve starts reducing quantitative easing in the US, interest rates will rise – and money parked overseas will flood back into the US. When yields in the US rose in the summer, it triggered an exodus of capital out of emerging markets, and many fund managers fear a repeat in 2014. Emerging markets look cheap – but might stay that way. Reported by guardian.co.uk 13 hours ago.
Wind farms off Britain's shores are being cancelled almost weekly. Hard-pressed governments across Europe are slashing subsidies for solar power and other renewable projects. Yet what was the best investment fund to put your money into in 2013? An alternative energy fund invested in wind turbines and solar cell makers, which turned £1,000 at the start of the year into £1,680 now.
Guinness Alternative Energy jumped 68.8% over the year, the best performance of the nearly 3,000 funds on the market which, on average, made gains of around 11%. One of Guinness's biggest holdings is Gamesa, a Spanish wind turbine maker. Its shares started the year on the Madrid stock exchange at €1.73 but have more than tripled, trading this week at €7.21.
But as Edward Guinness, manager of the fund, acknowledges, this is a story about recovery from near disaster. As recently as September 2009, Gamesa was trading at €16.50, so it is still less than half the price it was. His holding in Renesola, a Chinese maker of solar cells, has followed a similar path. Its shares are traded in New York where, in 2010, they were changing hands at $13. Over the last year they have nearly doubled – from around $1.50 to $3 after nearly collapsing in 2011, hit by rampant over-capacity and falling prices.
Early investors in Guinness Alternative Energy are still nursing large losses, with its unit price 60% below the launch. "We're just turning the corner, but we still have a hole to dig out of," admits Guinness. But he's confident that investors in alternative energy have a bright future. "The medium to long-term story is very good. The cost of solar installations has fallen dramatically, and you are seeing a move from heavily-subsidised markets in Europe to countries which can now operate solar plants that will be able to work without subsidy," he says.
But the major surprise this year is that the best gains for investors have not come from emerging markets, but from small companies much closer to home. The average UK smaller companies fund earned investors 35% this year, and that comes after a terrific run over the past five years.
If you'd put £1,000 into the average fund in the sector five years ago, it would now be worth £3,000. Compare that to the people who trusted the likes of China and south-east Asia with their money; the average emerging markets fund actually lost money in 2013, and over five years has returned around 76%, or less than half the money that British smaller companies made for investors.
Praise has to go to River & Mercantile, a relatively small fund manager, which managed to get two of its funds into the top five across the year (out of 2,985), both of which are focused on either UK small companies or recovery stocks. Investors who have held them have pocketed gains of 220-250% over the past five years. Mark Thomas of R&M says the firm operates a "potential, valuation and timing" strategy when picking stocks, which has paid off across its range of funds. He cites ITV as a typical "recovery" stock. "We bought it in 2008 when it was trading at around 32p. No one else wanted ITV at the time – they thought broadcast television was dead, but they hadn't counted on Downton Abbey or the X Factor, and how broadcast television is still sought after by advertisers." R&M has now sold its holding in ITV, which has gone up in price fivefold since 2008 and is trading at around 180-190p.
So is it too late to buy UK smaller company shares? R&M thinks there is still value to be found, but adds that European smaller companies may have better immediate prospects, as the continent follows Britain out of the recession.
"In Europe there is a very similar stock to ITV. It's called Mediaset and, yes, it's head is Silvio Berlusconi. Everybody hates it as a share, but we think it's like ITV three or four years ago."
Shares in Mediaset, the biggest commercial broadcaster in both Italy and Spain, and which owns Endemol (makers of Big Brother), are less than half the level they were trading at three years ago and a fraction of a decade ago.
The major fund management groups are largely tipping Europe and Japan as the best bet for stock market returns in 2014. Both are "recovery" stories after many years of disappointing returns, and are regarded as cheaper than stock markets where economic recovery is more evident, such as the US and UK. Europe is the region most widely expected to outperform in 2014, a survey by the Association of Investment Companies showed, also coming top in Merrill Lynch polls of fund managers every month since September. But Fidelity Investments warns investors that the eurozone's problems are far from solved. It sees inflation heading towards zero or even negative in some parts of the continent, which will make it difficult for countries such as Italy to service their debt mountain, while some banks remain a worry.
Emerging markets such as China, Brazil and Russia look cheapest on most valuation measures, but the big investment houses are cautious. Next year is likely to see the fabled 'taper' come into operation. Many think that as the Federal Reserve starts reducing quantitative easing in the US, interest rates will rise – and money parked overseas will flood back into the US. When yields in the US rose in the summer, it triggered an exodus of capital out of emerging markets, and many fund managers fear a repeat in 2014. Emerging markets look cheap – but might stay that way. Reported by guardian.co.uk 13 hours ago.