Can 'Green' Investments Power Your Investment Growth?

'Green' investments are rapidly gaining in popularity for a couple of very good reasons: first, growing numbers of Canadians are seeking out 'socially responsible' investments that have a positive environmental and social impact as well as providing reasonable returns; and second, because 'green' industries are a fast-emerging market sector with a potentially unlimited upside.

Take the 'green' energy sector, for example: Worldwide energy demand is expected to increase by more than 50 per cent in the next 25 years, so it's no surprise that the demand for clean, alternative energy sources is stronger than ever.

Producing and transporting alternative energy requires new technologies, new companies - and most importantly the ability to raise new capital. One research firm estimates more than $60-billion was invested in the alternative energy industry worldwide in 2006, more than double the amount spent in 2004.

The potential rewards would seem to be considerable and making an investment in alternative energy could appear to be a slam dunk but there is also risk.

The challenge isn't finding alternative energy companies there are plenty to choose from the problem is finding the right alternative energy investments. Like any other investment opportunity, you should seek out diverse, fundamentally sound players with the potential for growth and profits.

Here are some important alternative energy investment considerations:

• Potential market share. Will a company's products be sold and distributed in North America, or around the world? What is the intensity of the competition? How well-funded are competitors?

• Manufacturing scale. Can a company design and manufacture its product in a cost-effective manner that allows for healthy profit margins?

• Government regulation. Regulations increasingly favour alternative energy sources. But they vary according to jurisdiction, and are constantly evolving. How will they affect a particular business?

• Incentives. Alternative energy incentives are becoming more common, with government tax breaks and subsidies for producers and consumers. How might these benefit an alternative energy investment?

• Technology risk. Today's promising product can be tomorrow's failure, especially if it's overtaken by newer technology. This can quickly alter the investment landscape.

• Product acceptance. Not every good idea meets with market enthusiasm. For example, when using new fuels, will the consumer be able to drive as far, and can they re-fuel conveniently?

• Management experience. With hundreds of companies starting up and getting funded, seasoned management teams are more likely to be able to navigate unforeseen developments.

A good way to be comfortable that you've made the right alternative energy investment choice would be to let an expert make it for you - by investing in a socially responsible mutual fund that has already identified a group of alternative energy and/or other socially responsible companies with the most assured potential. A professional advisor can help you go 'green' in the most powerful way for you.