Despite summer rally, clean energy funds still lagging fossil fuels

By Trey Thoelcke Updated Aug 18, 11:58AM EDT · Published Aug 18, 3:21AM EDT

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Despite summer rally, clean energy funds still lagging fossil fuels — © Sunrise 8-27-15 (CC BY 2.0) by Larry Smith

By Mark Hulbert

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — If 2022 were a normal year, renewable energy and climate-friendly funds might be winning the performance sweepstakes. But, I need not remind you, this is not a normal year.

Consider the performance of these funds for the year to date through Aug. 15, according to an analysis Morningstar conducted for Callaway Climate Insights. These funds (both open-end and exchange-traded) outperformed the S&P 500 by an average of 4.3 percentage points. (These calculations take dividends into account.) This margin of outperformance — known as alpha — might normally convince skeptics that climate-friendly investing is not only the right thing to do but also a market-beating strategy.

Except for one thing: Fossil fuel stocks have performed far better. So far this year, stocks of traditional energy companies have produced an average alpha of more than 43 percentage points. If you were otherwise tempted to attribute clean energy funds’ alpha to avoiding the risks associated with fossil fuels, then to what do you attribute the even-larger alpha of the fossil fuel funds?…

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About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.