Aim: Growth by direct and indirect investment in global companies and other organisations that are improving the efficiency of energy and water usage
Minimum investment: Lump sum £1,000 R shares, £50,000 A shares, monthly £50, monthly £100 for Isas
Investment split: 32% Asia, 26% US and South America, 25% Europe excluding the UK, 10% UK, 7% cash
Isa link: Yes
Charges: Initial 4.25%, annual 1.5% for R shares, 1% for A shares
Commission: Initial 3%, renewal 0.5% for R shares
Tel: 0845 230 9033
Premier environmental power and water invests globally in organisations that are improving the efficiency of energy and water usage. It was created by changing the name and investment mandate of the Premier smaller companies fund.
Looking at how useful the fund could be for advisers and their clients, Flowers McEwan director David Flowers says: “This investment choice opens up a wider range of possibilities for the client with either an international outlook or with a socially responsible investment bias. There are many unregulated collective investment schemes and some closed ended funds delving into the alternative energy and water arenas but there are fewer open-ended retail investment products.”
Flowers points out that the promoters of the fund take the view that traditional sources of energy are declining around the world, as are sources of water. “As populations continue to grow this is a vicious circle which is forcing governments to invest heavily in developing other forms of energy provision and in ways to make more use of existing water supplies. If you are convinced by this story then Premier have a good offering for you to use. The managers have experience in this sector and manage some closed funds of this type – although the performance has not been great in the short term.”
Flowers adds that the fund will, by default, also double up as an international fund with a leaning toward the Far East. “Both India and China feature strongly in the current investment portfolio,” he says. The fund is viewed by Flowers as a fairly standard open-ended investment suitable for most investors , which is averagely priced . “Premier is quite good at marketing and its literature provides a reasonable basic package of information,” he says.
Considering the less attractive features of the fund Flowers says: “Being a new and developing area in which to invest, the product has to be considered a high-risk investment. No doubt technology is changing to support better use of energy and water resources but it may take a long time for investors to see a return.”
He also wonders how long it will take nuclear power to recover from recent Japanese events. “This fund has significant exposure to that sector and this could lead to great volatility or loss – certainly in the short term,” he says.
Identifying the main competition Flowers says: “There are few retail products in this sector. Premier manages investment trusts with similar fundobjectives. Access to the market is primarily through unregulated collective investment schemes and closed-ended funds which have a narrower investment spectrum. Most Oeics and unit trusts are in wider but related fields such as energy production or general environmental responsibility such as the Neptune green planet fund.”
Summing up Flowers says: “For investors willing to invest and hold for the long term this could produce a good return after a volatile journey.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average