Environmental Funds - A portfolio performance evaluation

Abstract

The purpose is to measure the performance of environmental funds in terms of absolute returns as well as risk adjusted returns against their respective indices. This is to determine whether environmental funds can be a good investment object for both institutional as well as private investors.

It seems that a majority of the so called clean tech funds underperform the market by every measure performed in our research and cannot be recommended for single investments purposes. For those wanting to combine environmental benefits along with a financial investment, the non-profit funds combine environmental friendly companies as well as distributing some percentage of its capital to environmental organizations without underperforming the market by so much. However, if the current debt crisis is overbridged, then we see potential for rapid growth within this market segment, especially if the fund market gets more efficient and costs can be cut.