Investing Ideas: Renewable Energy Funds

If you are looking for interesting (and environmentally friendly!) investing ideas, renewable energy funds may be the way to go. These funds doing fairly well, and they could see even more boosts, thanks to the efforts of Congress to put substantially more funding toward renewable energy -- by taking it away from Big Oil.

Environmentally friendly mutual funds, like the Sierra Club Fund, have been around for a while. They mainly focus on companies that have sound environmental practices. What the market is really heating up on, though, are renewable energy funds, which consist almost entirely of companies that deal in renewable energy.

There are two types of renewable energy funds: mutual funds and exchange traded funds. Mutual funds are going to come with the general accouterments like fees and expense ratios. Exchange traded funds (like the Swedish ETF I mentioned a few days ago) are traded like stocks and will be subject to regular commission/flat fee type costs.

Here is what CNN Money points out about gearing toward these renewable energy funds, as well as other environmentally friendly investing practices:

There was a time when investors could count on losing a few percentage points in returns in exchange for making "green" or "socially responsible" investments, but one analyst said that is changing.

"I don't think they exceed expectations, but I don't think they disappoint either," said Jeff Siegel, managing editor of Green Chip Stocks, an investment newsletter focusing on environmentally friendly companies.

Investor interest in renewable energy funds is certainly growing. While many alternative energy companies aren't close to being profitable, the future potential for such investments is fairly good. If you have the risk tolerance for it, this might be a good addition to a well-balanced investment portfolio that is looking for a way to increase some of its returns, but can absorb the losses if renewable energy ends up tanking.

Disclaimer: I am not an investment professional, merely an interested amateur. Any investment carries the risk of loss. Consult with an investment professional and/or do your own research before making any investment decision.