WHEB Asset Management fund manager argues undervalued clean tech sector represents great investment opportunity

Stocks in the clean tech sector have become undervalued and are on the verge of a major bull run that could deliver sizeable returns for investors, according to a fund manager at one of Europe’s leading clean tech investment funds.

Speaking to BusinessGreen.com, Nicola Donnelly, fund manager at WHEB Asset Management, said that the inherent volatility of clean tech stocks meant that they had suffered disproportionately during the global economic downturn and were now well positioned for a rapid recovery.

“It’s a great investment for this sort of time in the [economic] cycle,” she said. “[The sector] performs very well in a bull run, but when everything crashes it tends to do worse than the market.”

Donnelly said there were encouraging signs that the market was at the start of a bull run and the long-term growth prospects of many clean tech firms coupled with ongoing drivers in the form of climate change risk and environmental legislation, made clean tech stocks particularly attractive.

WHEB Asset Management’s flagship Sustainability Fund, which was launched last year, is currently worth £25m and is expanding at average rate of £2m a month as investor appetite in the sector returns.

Donnelly said that the fund was in a particular strong position due to exposure to stocks in Chinese clean tech firms that are currently growing at stellar rates.

“You can currently buy stocks in a Chinese smart meter company that has the same p/e as a European utility, but while the European firm is growing at two per cent a year, the Chinese firm is growing at 20 per cent a year,” she said. “I know what I would invest in.”

She added that Chinese clean tech firms are likely to become an even more attractive investment prospect from next year, when the country’s government is expected to make the low-carbon economy a centrepiece of its twelfth five-year development plan.

Pessimism surrounding the current state of US climate change policy could also throw up significant clean tech investment opportunities, according to Donnelly, who argued that many US firms operating in the low-carbon space have become undervalued.

She said that while it remained unlikely that the US would pass a comprehensive energy and climate change bill, state-level legislation and the continuing expansion of the renewable energy sector could reignite investor interest in the sector.

“US investors are so negative on clean tech that any positive moves, even on a state-by-state basis, could lead to real excitement that renewable are still alive,” she predicted. “Just a flicker of interest in clean tech could see investors swing back very quickly.”