BlackRock clean fund targets Asian solar stocks

DAVOS, Switzerland (Reuters) - BlackRock’s New Energy Fund is “cautiously” investing more in solar companies after a glut in solar panels and falling prices saw producers’ margins squeezed over the past two years, its fund manager said.

The BlackRock New Energy Fund was launched in 2001 and had some $3.9 billion assets under management as of Dec 31.

The fund delivered returns of 21 percent in 2009. That compared with 27 percent returns to the wider MSCI index of global stocks

“We’re now cautiously increasing our weightings in solar, it is cautious because we think it’s a u-shaped recovery in demand,” co-head of the fund Robin Batchelor told Reuters on Wednesday.

“Were focusing a bit more on the Asian producers which we think have a structural advantage over some of the European producers,” he said in a telephone conversation from London.

“(Manufacturing in China) gets a big subsidy on power, cheap land, you’ve got cheap employment, it takes a bit quicker to get your permitting, all your environmental issues taken care of, these are things which all cost a lot in the western world.”

“Power is a big component in manufacturing cost, that’s putting a structural benefit toward some of the Asian producers.”

The BlackRock New Energy Fund cut its exposure to solar from up to 30 percent “several years ago” to 5 percent, in advance of the solar panel over-supply developing, Batchelor said.

ABN AMRO’s Solar Energy was down 3 percent last year, while the DJ-SAM (Dow Jones-Sustainable Asset Management) World Solar Index was down 2.4 percent.

More than half of BlackRock’s New Energy Fund is invested in companies specialising in renewable energy, with the rest in stocks for example focused on “green” buildings, electric car batteries, emissions trading and carbon capture and storage -- a technology meant to remove carbon emissions from coal plants.

A 39-year-old Batchelor launched the fund in April 2001.

He said four factors were restraining growth in clean energy: the availability of bank finance following the financial crisis; slow government disbursement of stimulus cash destined for the “green” sector; a general weakness in power prices; and a loss of momentum in new green policies this year.