Research reveals that renewable energy assets are key to portfolio diversification

A survey of 100 UK pension funds, institutional investors, and wealth managers from Downing LLP (Downing) reveals almost all say they will increase allocations to renewable energy as part of a diversification strategy.

Downing offers both institutional and retail investors the opportunity to invest in renewable energy and other infrastructure in the UK and northern Europe.

Ninety-two per cent of UK professional investors surveyed, who collectively manage around GBP118 billion in assets under management, are looking to diversify their portfolios using renewable energy assets over the next 18 months.

When asked which three areas of renewable energy will be most likely to achieve successful diversification, three-quarters (76 per cent) say solar; 74 per cent say hydro; 64 per cent choose biomass; 59 per cent pick wind and 27 per cent select tidal and wave. 

When asked how they expected they would allocate to renewable energy assets over the next 18 months, four-fifths say they will invest in more renewable energy projects in Europe and North America; three-quarters (76 per cent) say they will invest across more of the UK; 55 per cent say they will invest in more renewable energy projects in Asia; and 44 per cent will invest across other parts of the world.

Henrik Dahlstrom, Investment Director at Downing Renewables & Infrastructure Trust, says:  
“It makes sense that investors see renewable energy as a reliable diversifier. UK pension funds recognise the value these assets have to portfolios, and we have already seen a trend to increasing allocations, which looks set to continue over the next year and a half.”