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US Set for Golden Age of Green Investing, According to New Research


Business Wire
January. 28, 2009


Americans see a golden age for green investing,
according to the results of the second-annual survey on
environmental investing released here today by Allianz
Global Investors, a leading global investment firm. Of
the investors surveyed, 78% say we are likely to see
more policies to promote business investment in new
environmental technologies in the first year of the
Obama Administration than we did under eight years of
the Bush Administration. Further, nearly three-quarters
(74%) believe the new Congress will be more supportive
of policies to promote business investment in new
environmental technologies than the old Congress.

“Barack Obama won this election on a platform of change,
and the regulatory changes are likely to be very
positive for environmental investing,” said Bozena
Jankowska, lead portfolio manager of the Allianz RCM
Global EcoTrends Fund and head of the RCM Sustainability
Research Team. “The type of stimulus President Obama is
proposing represents a significant opportunity for
investors. More broadly, the tone, intensity and content
of the debate in Washington is changing and that’s what
is really important.”

Conducted for the second year in a row, the poll of
1,264 adults examined investors’ understanding of and
attitudes toward the environment from an investor’s
point of view. The poll was conducted via the Internet
between December 12 and December 19, 2008 by GfK Roper
Public Affairs & Media, a division of GfK Custom
Research North America. Participants had to be age 25 or
older and have primary or shared responsibility for
investment decisions in households with financial assets
of at least $100,000. The sample was weighted to match
the characteristics of the total online population in
terms of gender, age, household asset level and region,
according to the U.S. Census. The same methodology was
used for the survey conducted December 14-20, 2007,
which yielded 1,003 completed interviews.

Hope (and Confidence) Springs Eternal
Even though 2008 was a turbulent year for the broader
markets, survey data reveal that investors are still
generally optimistic, and they are particularly
constructive on the environment.

In fact, 72% of survey respondents say the recent
decline in stock prices has had no impact on their
inclination to invest in environmental stocks and about
half (48%) of investors say they are at least somewhat
likely to invest in these types of companies within the
next year.

“The need for pollution control, clean water and energy
efficiency is not going away. Investors perceive there
is real opportunity here and they want to capitalize on
it,” said Brian Gaffney, Managing Director and Chief
Executive Officer of Allianz Global Investors
Distributors.

According to the survey, investors continue to view the
environmental technology sector as a “buy,” with 64%
classifying the environment as the most desirable
investment opportunity of the 10 categories surveyed.1
Further, there was a 30% increase from 2007 to 2008 in
the number of investors who say they have already made
investments in companies that are capitalizing on
environmental trends (17% in 2007 versus 22% in 2008).
“Investors’ bright outlook on the environmental
technology sector is telling. This is perceived as a
long-term opportunity,” said Gaffney. “Investors
understand that robust demand for innovation and
solutions will fuel growth, and consequently profits,
for years to come.”

Beyond the environment, investors are generally
optimistic. Fifty-two percent say the Dow Jones
Industrial Average will be higher a year from now than
it is today.

Here Today, Here Tomorrow

Investors perceive that environmental issues will be
long-lasting and thus present a large and enduring
investment opportunity. Better than nine in 10 survey
respondents (91%) believe that finding solutions to
environmental problems will be a major issue for years
to come, and nearly seven in 10 (69%) say it is
important to look at investments in companies that are
capitalizing on addressing environmental problems.
Addressing and solving these problems has become a
top-tier concern of policymakers and opinion-makers.
Social commentators and authors such as Thomas Friedman
and Daniel Esty have opined there is tremendous
opportunity to create economic value by innovating in
the environmental space, and survey respondents agree.

The survey found that nearly eight in 10 investors (78%)
say environmental technology has the potential to be the
next great American industry.

“Government investment in the environment, and in
alternative energy in particular, will be an important
engine for economic renewal in the Obama
administration,” Jankowska said. “During his inaugural
address, President Obama said ‘We will harness the sun
and the winds and the soil to fuel our cars and run our
factories.’ This is a positive for the U.S. economy and
job creation, and for the advancement of the
environmental technology sector globally.

“At the same time, accelerating industrialization in
emerging markets will continue to spur the need for
environmental technologies. That has not changed despite
the broader economic slowdown,” Jankowska said. “We
believe it’s possible that we are in the early stages of
a long-term secular up-cycle for environment-related
companies.”

Even with current oil and gas prices relatively low,
there is evidence that investors are now taking a longer
view when it comes to the environment. Nearly all
investors (97%) say that exploring alternative fuel
sources for the future will remain important even if gas
prices come down.

American investors see room for progress, and perhaps
catch-up, at home. Fifty-eight percent say Europe is
ahead of the United States when it comes to addressing
environmental problems.

Seeking Help to Go Green

According to the survey, investors are eager to learn
more about environmental technology and the related
investing opportunities, and they are looking to
financial advisors for help. Better than two out of
three (68%) of all survey respondents agree they would
need to consult a financial advisor for help investing
in the environment.

Among those already investing with an investment
professional, 78% say that even though the market has
been performing poorly, they are still looking to their
financial advisor to bring them interesting investment
opportunities. However, 85% of those said their advisor
had yet to recommend an environment-related investing
opportunity. The securities of any single industry such
as environmental securities tend to be more volatile
than the stock market as a whole, and smaller companies
may have limited operating histories and be at a more
vulnerable stage of growth.

“This is a rapid growing and rapid-changing sector of
the market, so investors are looking for help to smartly
and profitably participate,” Gaffney said. “Innovation
in environmental technology is occurring at an
increasing pace and on a global scale, so evaluating the
opportunities may be difficult for individual investors.
Financial advisors can help investors navigate the space
and in turn, professionally managed products offer
advisors access to experience, technical expertise and
diversification in this complex sector.”

About Allianz Global Investors: Allianz Global
Investors, the asset management division of Allianz SE
[NYSE: AZ], is a leading investment management company,
with more than $1 trillion under management as of
September 30, 2008. Allianz Global Investors offers
access to a premier group of institutional investment
firms, including PIMCO, NFJ Investment Group, RCM,
Nicholas-Applegate and Oppenheimer Capital. The company
offers investment solutions across a broad spectrum of
asset classes and investment styles in a wide array of
products, including mutual funds, managed accounts and
closed-end funds. For more information on the survey or
for, please go to http://www.allianzinvestors.com/eco.
Allianz SE has been a pioneer in corporate sustainable
development. The Allianz Environment Foundation dates
back to 1990 and the firm recently partnered with the
World Wildlife Fund (WWF) on climate-change strategy and
research. In addition, Allianz is chairing a climate
change working group for the United Nations – the UN
Environmental Programme Financial Initiative. Allianz
offers a range of “green” products and services,
including emission trading credits, for its customers in
the insurance and banking sectors. It earned a top
rating in the insurance sector of the Dow Jones
Sustainability Index for 2006 and 2007.

An investment which focuses its holdings on
environmental-related industries will be more affected
by positive or negative events affecting these sectors
than a more diversified investment. Companies in these
sectors may be particularly susceptible to factors such
as environmental protection, political developments,
changes in government subsidy levels conservation
practices and tax policies, for example. These sectors
are newly developing and strongly influenced by rapid
technological change, which can render an existing
product obsolete. Water-related investments can be
affected by risks related to the volatile and
speculative nature of commodities, uncertainties
regarding exploration, environmental damage, depletion
of resources, and risks related to rapid technological
change.

 

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