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IFAs feel that Investors need to increase exposure to Renewable Energy

Two thirds (67%) of investment advisers think that high net worth investors need to increase their investment exposure to the renewable energy sector for the long-term and more than half (56%) for the short-term, according to an online survey conducted by Future Capital Partners (FCP).

PressThe industry survey, conducted over a number of months, polled financial advisers and accountants on the topic of investing in renewable energy. FCP's focussed involvement with the green energy sector, and the recent attention around the sector as a result of the Government's feed-in-tariff reviews, encouraged the firm to explore the market's opinion of renewable investment.

The poll revealed that two thirds (64%) of those investment professionals surveyed believe that it is a growing industry, yet they associate it with being overlooked by investors (43% partly associate and 34% fully associate).

When asked about exposure to the renewable energy sector, more than a third of advisers (36%) recommended that high net worth investors had 1% to 5% of their portfolio invested in renewable energy, while a further 20% believed investors should have a higher proportion at 6% to 10%.

Looking at the individual types of renewable energy investment, the poll highlighted that financial advisers were most familiar with investment in solar energy (42% quite familiar and 23% very familiar) and wind energy (over a third - 35% are quite familiar and 17% very familiar), while biomass was the area that advisers were least familiar with (27% very unfamiliar and 21% quite unfamiliar).

Potentially as a result of advisers' familiarity with the sector, the audience rated solar energy as most favourable of all the sectors (23% = very favourable / 56% = quite favourable), followed by energy efficiency technology with more than half being quite favourable to the investment sector and 13% being very favourable.

Piers Denne, Head of Sales & Marketing at Future Capital Partners, comments:"With the spotlight firmly on the green investment sector, we felt that this was a good time to explore the IFA community's familiarity with renewable energy investments at large. Encouragingly, the survey shows that advisers recognise the investment potential of this burgeoning sector. However, the poll also reveals that investment providers and the renewable energy industry could do more to make investors and their advisers aware of the uncorrelated inflation-beating returns on offer.

"The poll shows that the solar energy sector is arguably one of the most high profile sectors within the renewable energy industry and potentially one of the most favoured. However, it has suffered setbacks recently as a result of the DECC's cut to feed-in-tariffs, which highlights the need for the market to look for alternatives within the lesser known renewable energy sectors. This U-turn by the Government should act as a warning to investors and their advisers to look closely at the investment case for renewable energy and not rely solely on tax incentives."

The industry poll also revealed that the main reason why advisers are prevented from recommending investment in renewable energy sectors is because they do not know enough about the investment products on offer (36%). A further 32% believe there are other more attractive sectors and 18% agree that they do not know enough about the sector.

Piers Denne concludes:"The UK renewable energy industry is benefitting hugely from positive growth drivers as it strives to meet the EU's targets to reduce reliance on fossil fuels The industry is also being given a boost by the Government to encourage investment by offering tax incentives, which can provide downside protection when using tax-efficient products. All of these factors build an attractive investment case for the renewable energy sector. It is with this in mind that we as an investment boutique focus on proven technologies to create exciting investment opportunities for clients that are not normally available to them."

Fund context:

FCP have recently launched Elara Renewable Fund II EIS (“Elara II”) which is suitable for high net worth investors and is scheduled to close at 3pm on Thursday 22 December 2011. Like Elara I, the new EIS fund will invest in companies providing services to Blue Energy, which specialises in renewable energy project development, specifically wind and solar projects in the UK. There is no link between the returns to the client and Feed in Tariffs, and there will be no requirement for re-financing at the third anniversary to realise the funds.

Another interesting solar opportunity for high net worth individuals is being offered by Goldfield Partners with their Goldfield Solar EIS fund through RAM Capital. This fund is financing free solar on residential roofs and taking advantage of the pre 12th December 2011 Feed in Tariff. The fund will remain open after the 12th December until they reach their £10m target, to date £8m has been raised.

Both opportunities are available through Financial Advisers.

Useful links:

Worldwise Investor: Clean Energy

Louise Fallon: National Grid provide the background to the energy challenge

Simon Webber: Schroders feel the time may be right for Alternative Energy


Tags: UK | Clean Energy |

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Mark Hoskin is a Partner at Holden & Partners. Holden & Partners are Chartered Financial Planners who provide financial advice to high net worth clients, the majority of whom have a significant interest in ethical or environmental issues.

Mark Hoskin graduated with a History degree from Keble College, Oxford and went on to become a Chartered Accountant with Price Waterhouse. He cofounded Holden & Partners in 2003 and is a Certified Financial Planner and Chartered Financial Planner. Holden & Partners set up Worldwise Investor to help both advisers and investors understand quickly and easily how they can benefit from ethical and environmental investment in the UK market.

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