By ROB WHERRY
Promises made on the campaign trail aren't always kept. This time around, though, there seems to be bipartisan support for one particular vow: weaning the U.S. off its dependency on foreign oil.
No doubt part of the solution to that problem is alternative-energy sources. Indeed, President-elect Barack Obama said during the campaign that he would create five million jobs by heavily investing in this sector. Some of that spending could come in the form of a massive stimulus program expected to cost around $850 billion. The prospects for the sector, though, don't rest solely on a new administration. Alternative energy is growing both in the U.S. and overseas as products become more sophisticated and more affordable.
Alternative energy is a burgeoning class of mutual funds. In fact, it's so new it doesn't have its own classification in our Lipper database. That means we had to perform our fund screen this week using slightly different methods. We pulled a select group from other categories and then looked for those that had decent fees, performance track records and manager reputations. We allowed load funds. Four funds made our list. They are included below in order of return over the trailing 12-month period.
The alternative-energy industry encompasses the obvious, like solar-panel makers and wind-farm operators, but it also includes software designers working on "smart" power grids and even utilities with hydro or geothermal assets.
There are some caveats we should mention. Alternative-energy stocks tend to fall in and out of favor depending on the price of crude. When the per-barrel price approached $150 midsummer -- and gasoline crossed $4 a gallon -- alternative energy benefited because Americans quickly realized they couldn't afford to burn so much money at the pump. But when oil and gas are more affordable, Americans seem to forget about energy efficiency.
That said, whenever we encounter an investing area that seems to be on the cutting edge, we think it's wise to pay up for a good actively managed mutual fund. The alternative-energy space is one of those areas. But a word of warning: These funds have been trounced this year in the pullback in the broader energy sector. Building a position means you're looking toward the future.
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