3 investment trusts to buy now for the green revolution

I reckon these three investment trusts offer a reduced-risk way to invest in the many green environmental businesses that are growing today.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Environmental technology concept.

Image source: Getty Images

This green environmental thing isn’t just good for saving the planet. With forecasts for around 80% of all energy coming from renewable sources by 2040, I see exciting investment opportunities too. I’ve been investigating investment trusts that focus on this emerging industry.

Jupiter Green Investment Trust (LSE: JGC) is small, with a market-cap approaching just £57m. But since launch in 2006, the share price has climbed approximately 165%. It’s up 24.5% in the past 12 months.

The trust says it “invests globally in companies which have a significant focus on environmental solutions.” So it’s global, with under 6% of its funds invested in UK equities. I see almost nothing in the top 10 holdings that I recognise. Danish wind turbine manufacturer Vestas Wind Systems is there, as is Evoqua Water Technologies of the USA. Japan’s Azbil is in the mix too.

Not knowing these companies is unfortunate. But they appear to be profitable today rather than ‘jam tomorrow’ hopefuls. I’ll dig deeper to properly understand the inevitable risks, but I think this looks promising. At 265p, the shares are on a discount to net asset value (NAV) of around 6.5%, which adds to the attraction for me.

Waste services investment trust

The Impax Environmental Markets Trust (LSE: IEM) share price is up 42% over the past 12 months, and has gained 161% over five years. This investment trust is a bigger one, with a market-cap of a nearly £1.6bn. The trust targets companies providing cleaner energy, water and waste services.

With the shares at around the 540p level, it’s on a 6.8% premium to NAV. That, coupled with its more established market-cap, suggests investors see Impax as less risky than Jupiter Green. I see less personal risk because I am actually familiar with some of its investments.

Clean Harbors, a provider of environmental services, including hazardous waste disposal, which has been around for 40 years, is its top holding. Most of the holdings are American, with Pentair, another water treatment company, also in the top 10. Software firm PTC is there too, though I have yet to investigate its environmental angle.

UK wind

Greencoat UK Wind (LSE: UKW) owns and operates wind farms across the UK. And we have plenty of the key asset here. It already supplies the likes of SSE and Centrica with power.

That strategy generates solid dividends, and yields over the past five years have been around the 4.5% to 5.5% range. Earnings have been a bit up and down, but the dividend has been nicely progressive. With big dividends, the shares haven’t gained as much as investment trusts seeking growth. But 17% over five years isn’t too shabby as a bonus on top of the income. It hasn’t really moved over the past 12 months though.

The share price of 135p represents a premium to NAV of around 4%. That sounds attractive to me. But there’s a specific risk here as the trust is invested in one specific business. More conventional investment trusts offer wider diversification, and that helps spread the investment risk.

There’s a speculative aspect to investment trusts like these, and with that comes risk. But pooled investments help to offset this. These are all ISA candidates for me.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Bearded man writing on notepad in front of computer
Investing Articles

Is there still time to buy Scottish Mortgage shares?

The Scottish Mortgage share price has risen strongly in recent weeks. Should I pile into the FTSE 100 momentum stock…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Why I’d start buying shares with £250 today not £20,000 in future!

Is it worth waiting to start buying shares until one has more money to invest? Our writer doesn't think so…

Read more »

Playful senior couple in aprons dancing and smiling while preparing healthy dinner at home
Investing Articles

I’ve bought Diageo shares to boost my long-term passive income!

I plan to hold on to my Diageo shares well into retirement. Here's why I think it's a top stock…

Read more »

New virtual money concept, Gold Bitcoins
Investing Articles

Down 61%, are Argo Blockchain shares worth buying?

Argo Blockchain shares have tumbled in value. As a shareholder, Christopher Ruane considers what might come next for the business…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 UK dividend stocks with yields over 10%

These dividend stocks are the highest yielders on the UK market, says Roland Head. But how safe are these generous…

Read more »

Couple relaxing on a beach in front of a sunset
Investing Articles

I’d start buying shares for passive income with this pair

Our writer is looking to earn passive income via investing, and here are two leading stocks he might buy.

Read more »

Tanker coming in to dock in calm waters and a clear sunset
Investing Articles

Here’s the Shell dividend forecast through to 2024

The Shell dividend is still nearly 50% below 2019 levels. Will the oil giant use record profits to rebuild its…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

3 FTSE 100 stocks I think Warren Buffett might love!

Warren Buffett made his fortune thanks to the success of US shares. But here are three FTSE 100 stocks I…

Read more »