Despite summer rally, clean energy funds still lagging fossil fuels

By Mark Hulbert

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — If 2022 were a normal year, renewable energy and climate-friendly funds might be winning the performance sweepstakes. But, I need not remind you, this is not a normal year.

Consider the performance of these funds for the year to date through Aug. 15, according to an analysis Morningstar conducted for Callaway Climate Insights. These funds (both open-end and exchange-traded) outperformed the S&P 500 by an average of 4.3 percentage points. (These calculations take dividends into account.) This margin of outperformance — known as alpha — might normally convince skeptics that climate-friendly investing is not only the right thing to do but also a market-beating strategy.

Except for one thing: Fossil fuel stocks have performed far better. So far this year, stocks of traditional energy companies have produced an average alpha of more than 43 percentage points. If you were otherwise tempted to attribute clean energy funds’ alpha to avoiding the risks associated with fossil fuels, then to what do you attribute the even-larger alpha of the fossil fuel funds?…

Subscribe to Callaway Climate Insights to keep reading this post and get 7 days of free access to the full post archives.

Sponsored: Find a Qualified Financial Advisor

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.