The Biz

The stock market is in free fall—which actually makes now a good time to get in. And thanks to an explosion of stocks in so-called “green” companies, this may also be a good time to start building a nest egg that can not only sustain you in your golden years, but Mother Earth as well, notes a local investment adviser who specializes in such investments.

Many major mainstream investment houses now offer a handful of green securities, but specialized firms that handle such investments exclusively are also emerging rapidly. In the Asheville area, there’s Green Alpha Capital Management, which opened its doors in January.

The trend-setter: Environmetally conscious investors now have numerous green options — and the market continues to grow, says advisor Bruce Dannenberg.

“I’m the only game in town right now,” says owner Bruce Dannenberg, adding that he knows of no other exclusively green investment firm in the Carolinas, though there are local advisers who represent out-of-state firms specializing in green and socially responsible investments. “It’s a tricky business. There’s lots of volatility.”

But in many ways, building a green portfolio is not much different than the standard way dear old dad did it. The first key, says Dannenberg, is considering what your objectives are, your time frame for investing and, most importantly, your risk profile.

As with more mainstream investments, he says, an aggressive portfolio is built primarily on individual stocks. Less risky “growth” and “balanced” portfolios offered through Green Alpha shy away from individual stocks in favor of the more diversified ETFs, or “exchange-traded funds,” which contain a mix of stocks and bonds similar to indexed mutual funds.

Many local individual investors were reticent to discuss their portfolios. But Asheville resident Nancy Phillipe, a recent Florida transplant, says she’s been investing green for the past three years. Without going into details about her holdings, which are mostly in alternative energy ETFs and a socially responsible mutual fund, she says she’s been pleased with the returns so far. Phillipe believes her portfolio will only strengthen as technology advances and the need for alternative energy sources grows.

“I could probably go mainstream and get a better return … but at what costs?” she asks. “I feel like I’m on the vanguard, doing something positive for the world and for progressive companies who want to do something positive—and making clean money in the process. There are lots of corporations out there that I don’t patronize on principle, so why should I help them out by investing in them? This way, I can have some peace of mind that I’m at least not a hypocrite.”

Phillipe’s husband, Carl, invests through a 401(k) at his job, but his choices are limited to a handful of mainstream mutual funds. He’d go green, too, except his employer matches a portion of the pay he plows into his investments each month. Before the market turned sour, Carl’s return was beating his wife’s ETFs. “Not anymore,” says Ms. Phillipe with a chuckle.

Green day

Some ETFs track indexes related to producing green and renewable energy, water resources, the transition from old to new technologies, technological innovation and more. Numerous choices are currently available, and more are in the works as the green trend takes hold. There also are green and socially responsible mutual funds, such as those offered locally by investment adviser Leah Song, who represents the Colorado-based First Affirmative Financial Network (www.firstaffirmative.com).

“There are no ETFs on greenhouse-gas reduction yet, but that’s coming, and it’ll be based on carbon-credit types of companies,” says Dannenberg.

“The myth that is out there that if you invest green you’re going to sacrifice your return” is false, Song maintains. “It’s just not true any longer. In fact, you’re more likely to get a better return investing green than you would otherwise.

“The other thing about green investing is, why is it important? How does it work? We have social-screened companies and firms. We have shareholder advocacy and community investing. Those are the three prongs of green investing. People usually invest for the bottom line, and what we’re saying is you get a double bottom line when you invest with us, because you’re not only getting good returns on your money, you’re also getting peace of mind that you’re actually doing good in the world. Sometimes we even say there’s a triple bottom line, called ‘People, Planet, Profit.’ The three P’s, like three legs of a stool.”

Western North Carolina is home to a growing number of green companies offering opportunities for angel investors and the like, but so far there are no local publicly traded green companies on any of the nation’s securities exchanges. “That will come in time,” Dannenberg predicts.

And though a growing number of investments may be green, they’re not magical, he warns. “It’s a volatile area, it’s an emerging area. It’s technology-intensive, and it’s very competitive,” Dannenberg says of the green sector. “And because of the current market volatility, these stocks fluctuate quite a bit. That’s why it’s important to understand how much fluctuation and risk a client can take. They go up, they go down, they go all over the place.”

In his own work, notes Dannenberg, he typically tracks 30 stocks and 10 ETFs. Current winners include Energy Conversion Systems, which makes components for hybrid vehicles; Evergreen Solar; Fuel Cell Energy Inc.; Consolidated Water; and U.S. Geothermal. Dannenberg is also high on the PowerShares family of ETFs, especially its Water Resources Portfolio and the WilderHill Clean Energy fund.

And though more and more companies are now marketing themselves as environmentally sustainable, not all green businesses are created equal. General Electric, for example, crops up in many green portfolios due to its role in developing alternative- and clean-energy technologies. But the company also builds and operates nuclear power plants.

“Sustainability, that’s a big buzzword for a lot of big companies these days,” notes Dannenberg. “They want to be green or carbon-neutral. … But we focus on companies that are specifically developing products or processes in these areas of alternative energy.”

Dannenberg says his vocation grew out of his personal evolution as a green-minded individual. “I’ve been following this area closely for five years and interested in it for 20 years. My family is ecologically minded, and I’ve evolved over the years to really see the importance of this area. Socially responsible funds have been around for a while, and that area has not been a high-profit area, but it has kind of evolved into this ecological green area that can provide benefits for the planet and also provide hefty returns.”

Investors, he adds, “are getting more and more interested. The metrics are tremendous in terms of the growth of alternative energy—though it hopefully won’t be ‘alternative’ much longer. As fuel prices rise, more and more firms and individuals have seen the potential. … There are new funds and companies coming out all the time.”

Still, Dannenberg advises investors to be wary. “Everyone wants to be green and make consumers believe they are doing green things,” he notes. “But there’s lots of companies to avoid out there. … You really have to do your research.”

Meanwhile, the bear market of the last six or eight months has been “a tricky time for people to get out of more traditional investments,” says Dannenberg. “On the other side, there are a lot of very good values out there in terms of these green, alternative companies. But it’s a good time to invest: When everything’s low, that’s when you want to buy in.”

For more information, contact Dannenberg at 651-8234, or Song at 645-3106.

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