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Student fund managers fuel colleges’ clean energy investments

PHOTO BY Peter Morenus / UConn Photo

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Renewables can provide a hedge against more traditional investments such as oil, one student said.

As colleges and universities divest from fossil fuels, investments in clean energy have not been as quick to catch on, in part because of unpredictable changes in government policy.

But student-managed funds, including at universities in Connecticut and Rhode Island, are starting to invest more aggressively in renewable energy companies to hedge their portfolios and to gain from market returns.

“It has been my interaction with the students over the last nine months that convinced me that ESG [environmental, social and governance] policies could also be a source of competitive advantage, leading to better commercial outcomes,” said Blake Mather, a former executive at Goldman Sachs and an adjunct faculty member and advisor to a newly launched student-managed fund at the University of Connecticut’s Stamford Campus.

The $500,000 portfolio was set up this past fall semester so students can benefit from real-world investing experience. It’s currently valued at $521,243 with a return of 4.25 percent, versus the 2.8 percent return on the S&P 500 for the same period. Earlier in February, student managers picked up a stake in Florida-headquartered NextEra Energy Inc., one of the largest producers of wind and solar energy, with $40 billion worth of investments planned in American infrastructure through 2020.

The students, Mather said, might have a bias for renewable energy investments for philosophical reasons, but any investment must serve the needs of the client, which in this case, is the university.

“[NextEra] is a great example of a green investment that has very strong fundamentals and, just as importantly, is priced at a level to offer a margin of safety that the team found compelling,” Mather said.

NextEra is the only renewable energy company in the basket — the student-managed fund is closely aligned to the industry weights that make up its benchmark, the S&P 500. Still, students screen every potential investment for environmental, social and governance policies, Mather said, which the team believes is an indicator of the quality of management.

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