Bank Sarasin is adding U.S. stocks to its New Power Fund following the signing of a $787 billion stimulus package by President Obama, of which 13.5 percent has been earmarked for climate change initiatives.
So far we haven't had such a big focus on the U.S., because in terms of renewables it wasn't the place to be -- we were more focused on Europe, said Matthias Fawer, vice president of sustainable investment at Bank Sarasin.
But now with the stimulus package and the slowdown in Europe, especially in the Spanish solar market, we are moving to U.S. stocks, he said.
Fawer is expecting a resumption of growth in installed capacities in wind and solar power in the second half of 2009, in both the U.S. and Europe. Current over-capacity in the wind sector has pushed down wind turbine prices.
U.S. stocks in the solar vanguard that may do well include thin film makers First Solar, a 2.97 percent holding in the fund, and Energy Conversion Devices.
Companies like solar component manufacturer SolarWorld, a German stock with manufacturing facilities in the United States, are also thought likely to benefit from the stimulus package. At 4.89 percent, this was the largest holding at end-January.
Last year renewables sold off as the collapse in the oil price to $40 a barrel and the drying up of project finance for renewables led to heavy outflows from the clean tech sector.
Lipper data show that the Sarasin New Power Fund was down 55.17 percent in the 12 months to end of January, and 13.23 percent down against the Lipper Global - Equity Global fund universe. The New Power fund family has some 192.97 million pounds ($274.8 million) under management.
Of the $106 billion that has been committed to climate change initiatives, according to Deutsche Asset Management figures published this week, some $85 billion is allocated to direct spending and $21 billion to renewable energy tax breaks.
The direct spending will include investment in the electricity grid to improve its efficiency, and in new transmission lines to connect renewables to the big cities.
Bank Sarasin has recently added stocks like General Cable and ITC Holdings to its portfolio to benefit from this theme. ITC has plans to build a $12 billion transmission line to carry wind-generated electricity to the cities of the Upper Mid-West.
Fawer also highlighted stocks such as Itron, a smart meter manufacturer, as likely to benefit from the energy conservation grants. Smart meters help smooth demand and supply for electricity from solar and wind power providers.
Meanwhile, Florida Power & Light Group, which made up 3.08 percent of the fund at end of January, is thought well positioned to take advantage of project financing.
More utilities are entering project development, Fawer said, also citing European stocks EDP Renovaveis SA and Iberdrola Renovables, a 3.08 percent holding, as active in this area, as well as U.S. stock SunPower, a 3.17 percent holding.
(Editing by Jon Loades-Carter)