Green With Envy Over New Alternatives Fund
Maurice Schoenwald had seen one too many oil crisis, but he also saw the future.
It was a solar energy mutual fund called New Alternatives. In 1982, Schoenwald and his son David registered the fund – the first of its kind -- with the Securities & Exchange Commission.
“I went to a boat show in New York because I like sail boats.” Schoenwald recalls. “I saw solar cells and thought we could make electricity and we don’t need oil anymore.”
Schoenwald was about as long on vision as he was on reasons. At the time, he was also concerned that oil-rich Saudi Arabia and other Middle East producers were a threat to Israel.
“I’m Jewish. I like Israel. I said 'I’m going to save Israel',” says Maurice Schoenwald.
“We were getting manipulated by OPEC,” adds David. “There was a lot of opposition and brouhaha over nuclear power plants. We brought to it some personal interest in the environment. We were both sailors.”
Israel is still around. So are David and Maurice Schoenwald, now in his 80s, and New Alternatives, which has $270 million in fund and some 12,000 investors, who have been well rewarded in recent years.
The fund is up 33.18 percent year to date (through Oct. 22), 46.90 percent over one year and 28.33 over three years, based on annualized total returns. Over a five-year period, it is up 23.77 percent, second only to the Winslow Green Growth fund, which is up 28.07 percent. Over ten years the fund has returned 9.54 percent, thanks to a rough patch between 2000 and 2002.
Despite that performance and their place in mutual fund history, Maurice and David Schoenwald are notably self-effacing.
Both father and son -- lawyers by trade, liberal by political persuasion and champions of the poor – recall how they had to scrounge together the $100,000 minimum needed to meet the SEC registration requirement.
Moreover, neither is wont to proselytize about the virtues of green investing or pontificate about the broader green movement.
David, for one, admits, that green investing is “certainly in fashion” without elaborating.
When asked what’s different about green investors today, he says, “There seems to a lot of investing on momentum. You don’t know whether they’re investing because of the good recent performance or because they are die-hard environmentalists. The shareholders who have been with this firm a long time are die-hard environmentalists “
New Alternatives has about 60 companies in the fund, the majority of which are non-US. (Given the roots of the founders the fund also “holds cash” in a small number of banks and credit unions lenders that provide loans for low-income housing and small businesses.)
A glance at the list of holdings on the fund’s Web site reveals a few that may not immediately appear to have green stamped on them -- Owens Corning, Johnson Controls, South Jersey Industries,Philips Electronics, Saint Gobain, but there are definite connections. (Whole Foodsis a high profile and notable exception).
Three big areas of investment are energy creation, conservation and water.
New Alternatives owns a number of firms in the solar, geothermal, biomass and wind spaces.
“The things that have done better in recent years are the wind companies and some of the solar companies,” says David. “I think wind is closer to being economically viable without subsidies than some of the alternatives. We particularly like solar thermal, which is using sun to heat water or liquids to drive a generator for heating water to heat buildings.”
Schoenwald cites Spain-based Acciona, which the fund owns. The company took a controlling stake in Solargenix Energy, known for solar thermal power plant, Solar One, in Nevada. Acciona also makes wind machines.
South Jersey Industries, a natural gas utility, has a number of co-generation projects that combine heat and electrical power, achieving greater efficiency. It also has a unit that’s involved in pulling methane from landfill sites.
“It wouldn’t appear to be a green stock but has green on its face,” explains David.
And that’s where Owens Corning and France-based Saint Gobain come in. Both are in the insulation business, while the former also makes they make materials used in wind turbines.
“I like conservation, says David. “ Insulation has not caught on like solar. There are all sorts of mandates to use insulation to conserve energy.”
As for water, Schoenwald days its “right up there with alternative energy.” New Alternatives owns Singapore-based Hyflux. It usesmembrane filtering to clean water and has markets in China and India.
“There are those who say there are companies that are exploiting water as an investment area because they are providing water to new areas in poor countries,” says Schoenwald. “You can also view water as a conservative investment with steady cash flow, steady dividends. You have companies that make equipment that will clean water. We’ve owned a bunch of them over time and they have more often than not been disappointing."
Though Schoenwald says the expanding universe of companies sometimes makes it harder to pick stocks and valuations may be getting rich, there's nothing disappointing about his fund's performance so far this year.