HardAssetsInvestor

Written by Murray Coleman  |

July 29, 2008

An Interview With Robert Dehollander

Details

The environmental-engineer-turned-CFP talks to HAI about new developments in alternative energy, and how those might play in investors' portfolios.

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Robert Dehollander used to be an environmental engineer. His specialty was working on air quality and wastewater projects for large corporations. After serving as a consultant for about 10 years, the Greenville, S.C., resident decided to change careers.

At first a hobby, the 44-year-old ex-engineer had become a professional practitioner of modern portfolio theory. His technical background made number crunching seem easy. Now, a decade later, Dehollander runs his own financial advising business.

Earlier this week, IndexUniverse.com's Managing Editor Murray Coleman caught up with the busy independent portfolio manager, who takes a top-down approach to portfolio construction for long-term-oriented investors.

HardAssetsInvestor.com (HAI): Do you focus solely on alternative energy investments?

Robert Dehollander (Dehollander): No, we take a diversified portfolio approach for our clients. But we like to play long-term themes we see developing in the economy. One of the major ones we see now is development of alternative energy companies.

HAI: How big of a portion is alternative energy in your asset allocation plans?

Dehollander: It depends on the client. But we'll typically go anywhere from 3-7% of total assets under management. An allocation of less than 3% doesn't have much impact on overall portfolio returns. But we've found that going above 7% really can change the risk characteristics of a portfolio.

HAI: What are your favorite plays in the alternative energy space right now?

Dehollander: I like to buy the sector as a whole right now. In any type of emerging space like this, there's always going to be technological developments and consolidation that you just can't predict today. So if you don't know which horse is going to win, you buy all of the horses. That's an old adage, but it's one we use a lot with our clients when discussing emerging sectors like alternative energies.

HAI: What ETFs do you favor now?

Dehollander: Right now, we're using some of the PowerShares funds. That includes the Invesco PowerShares Global Clean Energy Portfolio (AMEX: PBD). It includes a broad array of alternative energy sources. So it's not just wind and solar. And it's primarily global, which is good since Europe and some other parts of the world have a real head start on the U.S. in this space. It's our core holding in the alternative energy sleeve of our portfolios.

HAI: What other ETFs do you like?

Dehollander: We're also using the Invesco PowerShares WilderHill Clean Energy Portfolio (AMEX: PBW). It's primarily investing in U.S.-based companies. So we use that for clients who need more domestic stock exposure. But most of our clients need more rather than less international exposure in their portfolios.

HAI: Do you see any other interesting ETFs on your radar?

Dehollander: Yes, we're looking at the First Trust Global Wind Energy ETF (NYSEArca: FAN) and the Invesco PowerShares Global Wind Energy Portfolio (NASDAQ: PWND). We're also looking at some of the new solar ETFs. But we're not putting any client money into these yet. We prefer to remain more broadly based in alternative energy at this time.