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Green investing tips

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By Phil Hands | Monday, September 17, 2007 2:26 PM CDT | () comments

Venture abroad: European companies set the pace in development and deployment of green technology. Many are more profitable than their fledgling U.S. counterparts.

Eggs in many baskets: Rather than invest in individual companies, consider a mutual fund that has holdings in variety of large and small green-oriented industries. For example, the New Alternative Mutual Fund holds stock in clean biotech industries and a number of 'small-cap' green technology startup firms. Mutual funds spread your risk across many companies, a safer bet than risking the nest egg in one company or startup.

Research relentlessly: No universally recognized agency certifies that a company or mutual fund is as green as its claims. Always thoroughly check out green claims, and also look at stock or mutual fund performance to get a sense of the level of risk involved in any investment.

Size matters: Smaller, newer green technology companies may be riskier investments. Larger, more established firms may be more stable and more diversified, but less likely to be truly as green as smaller, 'pure play' companies focusing on one specific industry, such as wind or solar power. Again, assess the risks.

Understanding 'best of breed': This term refers to a company that has the best environmental record in its industry. But it's all relative: An oil company can be best of breed but may not be anywhere near as green as a solar power company, for example.