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September 19, 2007
Canada is Coming Clean: First Canadian Global Clean Energy Fund Launched
    by Anne Moore Odell

Criterion Investments has announced its Global Energy Fund, reflecting a growing enthusiasm for clean energy by investors, companies and governments.


Canadian investors interested in helping reduce carbon emissions and companies working to provide greener, cleaner energy have a new fund that focuses on global clean energy. Criterion Investments, headquartered in Toronto, Ontario, now offer the Criterion Global Clean Energy Fund. Pictet Asset Management has been named the Fund's investment advisor.

"Clean energy and energy efficiency is on everyone's radar screens, but more importantly the clean energy sector has matured; it's no longer a nascent industry," said Ian McPherson, President of Criterion Investments. "The clean energy investment universe, as identified by the investment manager has a market cap of $1.4 trillion with capital flows of $70 billion a year right now."

This new Fund is quite broad in its potential universe of clean energy companies. It will consider companies at every phase of the transition to cleaner energy, be it research, equipment and/or energy efficiency. Solar, wind, and hydroelectric companies will also make up part of the portfolio.

Businesses that help with energy efficiency and low-carbon energy sources like biofuels will likewise be considered. At this time, nuclear energy is outside of the investment universe for the Fund.

Although the Fund isn't created from an index universe, Criterion's Clean Energy Fund is designed to outperform the MSCI Global Equity Index over a market cycle. Criterion points out that clean energy is an untapped theme in the MSCI Index, as the index is currently only 4% clean energy.

The Fund is diversified by region and market cap. Forty-four percent of companies are from Europe, 39% found in North America and 15% in developed Asia/Pacific and emerging markets. Currently the Fund is invested in 63% large cap companies, while mid cap and small cap companies account for 24% and 11%, respectively. Two percent of the Fund will be cash.

The Fund's investment advisor Geneva-based Pictet Asset Management (PAM) and Criterion have an existing relationship, as PAM is the sub-advisor for Criterion's Water Infrastructure Fund. PAM's own clean energy fund has more than $500 million in assets and has outperformed the MSCI global equity. PAM currently has $120 billion under management.

McPherson stated: "Pictet is a 200-year old investment leader with a long and successful track record in thematic investment mandates using a GARP [growth at a reasonable price] investment philosophy. Pictet has a dedicated investment team specializing in different areas of the clean energy sector."

"There is an increased awareness and thus interest by investors to invest in themes supported by longer term secular trends," said Philippe Rohner, Senior Investment Manager at Pictet and Co-manager of the Criterion Global Clean Energy Fund. "The transition towards the need for reliable sourcing of not only cheaper, but also 'cleaner' fuels and electricity is an example of such a secular trend."

Criterion asserts that that energy companies could experience a 30% growth in earnings over the next three years. It declares that concerns about the shrinking supply of oil and gas and the political unrest in energy producing areas has helped drive the growing interest in alternative energy.

The European Union is leading the drive to cleaner energy. In less than fifteen years, the European Union has plans to get 20% of its total energy consumption from renewable and clean energy sources.

"The reality is that carbon emissions and climate change are major socio-economic concerns for us all," said McPherson. "This Fund does provide an opportunity tap into areas that are being driven by undeniable environmental trends."

The Criterion Fund can be used as a Registered Retirement Savings Plan (RRSP) eligible fund for Canadian investors. The minimum investment with the Fund is CAN$500. It's available currency hedged or unhedged, meaning investors can decide if they want to protect against the currency risk that can happen when investing in global markets. The average target management expense ratio (MER) is 2.75% for currency-hedged units and 2.65% for unhedged units.

Although this is the first clean energy fund available to Canadian investors, investors in the US have a growing list of clean energy funds to chose from, including Calvert's Alternative Energy Fund launched earlier this year, Guinness Atkinson Alternative Energy Fund, Ardsley Partners Renewable Energy Fund, New Alternatives Fund, and the Sentry Select Alternative Energy Fund, to name a few.

"We believe it's the perfect time to offer Canadian investors the opportunity to capitalize on the transition to cleaner energies," McPherson told SocialFunds.com. "Concern over climate change and a worldwide drive to reduce greenhouse gases, backed by ambitious government targets and incentives, has primed the sector for long-term growth," he added.

Criterion Investments is an affiliate of VenGrowth Asset Management, which has over $1.1 billion in managed assets.


 

 
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