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Investing With Purpose in 2021



At Servant Financial, our mission is to help you invest with purpose, but what does that mean? Everyone has different purposes and dreams in life to achieve fulfillment and happiness. We’re here to help you define yours and to find the investments that align with your unique values and preferences.

Whatever your purpose may be, there is likely an investment that will align with that goal and help you achieve it. Whether you want to create more financial security for your family, support your local community, save for retirement, or protect the environment, there are several investment opportunities to help you do so. Here are 5 purposeful investments that we believe will be trending this year and beyond:

1) ESG Investments

ESG stands for environmental, social, governance. ESG criteria are a way of assessing potential investments. These criteria evaluate a company’s environmental impact, its relationship with its employees, and its overall effect on the community in which it is located. 

As described in our previous blog “Investing With Purpose,” ESG mandates account for one out of every four dollars under professional management in the United States, and one out of every two dollars in Europe. ESG is most popular among millennials, women, and high-net-worth individuals. 95% of millennials surveyed by Morgan Stanley in 2019 expressed interest in sustainable investing and 90% want to tailor their investments to their impact goals derived from personal values and beliefs. 

ESG investing came of age in 2020, and millennials will continue to drive socially responsible investing trends in 2021 and for decades to come. Investments that satisfy ESG criteria can guide your decisions, making it easier for you to have confidence that your investments align with your purpose.

2) Alternative Investments 

Alternative investments are a great way to create an investment portfolio that reflects your values. While traditional investments in stocks and bonds can provide a core component of a well diversified portfolio, a traditional 60/40 portfolio (equity/bonds) will simply not provide the same level of diversification as a portfolio that includes alternative investments.

Types of alternative investments include real estate, infrastructure, commodities, precious metals and alternative currencies. One alternative investment that Servant has recently pursued is U.S. farmland.  

Farmland has proven to be a unique asset class that has historically delivered superior risk-adjusted returns and enhanced portfolio diversification. According to the TIAA Center for Farmland Research data, U.S. farmland has delivered annualized returns of 12.2% with volatility of 7% for the 48-year period ended December, 2018.  These risk-adjusted returns were superior to any other major asset class.  

Furthermore, TIAA data indicates that farmland has displayed negative or low correlation to other major asset classes. Farmland performance has historically been most correlated with broad inflation indices.

Servant Financial’s research of farmland and Opportunity Zone tax legislation culminated recently in a strategic alliance announced on January 21, 2021 with the farmland industry’s leading REIT, Farmland Partners.

Alternative investments like farmland or Bitcoin can open the door to non-correlated markets with different return and risk profiles which may better align with your goals and preferences. Alternative investments are also a great way to supplement your traditional investments in order to build more robust and personalized portfolios.

3) Essential Businesses 

Essential businesses have been and continue to be great investments, particularly in periods of economic uncertainty.  In the post-COVID-19 world, Servant Financial has been focused on three essentials for human existence: (1) people need to eat; (2) people need a place to live; and (3) people need energy sources to fuel their homes and transportation.

However, what businesses are deemed “essential” are constantly changing, particularly as human interactions become increasingly digital. In the modern era, we think of additional essential business like work-from-home technology solutions and delivery services, both of which hold strong and purposeful investment opportunities.

Our initial exploration into the essential business theme was in the agricultural space with work in U.S. farmland.  Other essential industries  that we foresee opportunities in and will continue to explore are non-traditional, more transient and spacious housing; renewable energy and carbon sequestration techniques; and continued digitization of human exchanges.

4) Inflation Hedges 

A common objective for all investors, both young and old, is to protect the buying power of their savings and investments from losing value to inflation. Whenever inflation rises faster than the growth and income of an investment, an investor loses real buying power.  This universal investment purpose is heightened in the current low interest rate environment with the 10-year U.S Treasury yielding just 1.1% and inflation running close to 2%.  

Under these circumstances, investors are increasingly seeking inflation hedges to replace or supplement the fixed income portion of their portfolios. Inflation hedges are investments that tend to move in tandem with inflation, such as commodities and real estate. Commodities and real estate are typically costly to produce or construct. As the cost of production increases in the form of labor and capital inputs, commodity and real estate prices must rise to make it economic for the miners and developers to continue production.

This purposeful repositioning of portfolios with inflation hedges is becoming a virtual imperative in 2021.  We believe that the Federal Reserve under Jerome Powell and the U.S. Treasury Department under Secretary Janet Yellen have effectively been merged into a single government enterprise intent on releasing the beast of inflation.  After its latest policy meeting, Chairman Powell statedFrankly, we welcome somewhat higher inflation. The kind of troubling inflation that people like me grew up with seems far away and unlikely.” 

Signs everywhere suggest markets are rotating into inflation hedges with gold up 24% and Bitcoin (digital gold) up 273% in 2020; both outperformed every other major asset class. Commodities are also reviving after a 10-year bear market. Natural resources like agriculture, energy and metals are setting up for an extended 1970s-like run that seems more likely than Chairman Powell intimated.

5) Education 

In 2020, education was drastically transformed as schools and universities were forced to adopt online-learning approaches in the post-COVID world.  Much like the virus accelerated the work-from-home and business digitization trends, it  accelerated the digitization and decentralization trends toward distance learning.   

These trends will be highly disruptive to the highly centralized and structured educational networks established at the grade school, high school, college, and university levels over the past few hundred years.  Online learning, digital classrooms, and alternative universities are becoming more popular and more desirable than traditional schools in many consumers’ minds. We see these trends accelerating.

Education is always a purposeful investment, and now, there will be more opportunities than ever to get involved with  the transformational and highly scalable  future of education either as a student or an investor.

Each of these 5 investment trends for 2021 contains many and varied investment opportunities, giving you the freedom to pursue your specific needs, values, and preferences.  We believe that investing with purpose is largely about the future. Consider: how would you like to see the world and humanity transformed for the better? Investing with your eyes fixated in the rearview mirror may feel safe and comfortable, but will that approach prove foolhardy in the long run? Your purpose is a vision for the future; your investments should target and advance that purpose. 

Purposeful investing creates a more meaningful connection between investors and their life goals and passions. Financial goals and life goals can be one and the same. Purposeful investing is the best way to create harmony between financial needs and your dreams for fulfillment, happiness, and achieving your life’s purpose. 

Contact us today to learn more about investing with purpose and the opportunities that Servant Financial can help you discover on your life journey.

Reawakening to Bitcoin – in the wake of the pandemic, Bitcoin has reached an all-time high

In the short time since we visited Bitcoin in our feature article, “Wake Up to Bitcoin,” in June, the cryptocurrency’s market value has skyrocketed. The price of Bitcoin reached a new all-time-high when it surpassed the $23,000 mark on December 18, 2020. According to a recent article by Forbes, the price of Bitcoin had increased by 150% in the last year.

Undoubtedly, COVID-19 is in large part responsible for this recent spike. Investors are seeking ways to hedge the inevitable inflation potential from the monetary and fiscal stimulus measures taken to mitigate the economic damage caused by the worldwide pandemic.

By now, we’ve all “woken up” to Bitcoin. So, now what?


What You Need to Know Before Investing in Bitcoin


Bitcoin has undoubtedly become attractive to investors both large and small, but there are a few things you should know before you add cryptocurrency to your investment portfolio as a long term store of value, much like gold. We do not encourage speculative short-term trading in bitcoin or other cryptocurrencies.

Patience is a virtue. Market timing is an illusion.


Bitcoin is a High-Return & High-Risk Investment

Though Bitcoin is worth more than ever, it is still a high-return, yet volatile investment. The currency itself was just created in 2009—it’s still a relatively new technology, and therefore unpredictable. Before investing in Bitcoin, you must assess how much money you are willing to invest and willing to lose. In other words, you need to get a good handle on your risk tolerance.

Bitcoin’s historical price gyrations could make you nauseous. You need to be prepared for this and stick to a disciplined rebalancing plan—add to positions during selloffs and trim positions on strength. For example, if your 1% position triples to 3%, you may want to trim the position back to a 2% holding. Likewise, if your position halves, you’ll want to buy more to get back to your targeted portfolio holding.

Additionally, because Bitcoin and other cryptocurrencies only exist virtually, they have the potential to digitally vanish or be lost. This risk is particularly high for bitcoin investors that store their bitcoin on a personal storage device and lose or forget their personal access key.

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Grayscale Bitcoin Trust’s (GBTC) is one of the few liquid, publicly listed exchange traded vehicles that invests in Bitcoin and is structured to mitigate these security risks. GBTC provides titled, auditable ownership through a traditional investment vehicle, can be held in tax advantaged accounts, and maintains robust security and storage protocols.


Bitcoin’s Use as a Currency is Highly Specific

Cryptocurrency is not exactly the kind of thing you use to pay for your morning coffee; its uses as a currency are more specialized through a networked environment. Bitcoin and other cryptocurrencies allow for fast, low-cost transfers of money, which is especially useful for international transactions. Transferring value internationally through bitcoin is far easier and cheaper than doing a wire through your traditional banking institution.

Bitcoin’s other use cases as an alternative currency are growing. As reported by Decrypt, another watershed event in the use of bitcoin and other cryptocurrencies as a means of exchange was PayPal’s October announcement that the payments giant would allow users to buy, hold, and sell cryptocurrency directly from their PayPal accounts. This action opens the door for PayPal’s 26 million merchants worldwide to accept cryptocurrency payments from PayPal’s 346 million users on its closed network protocols.


Bitcoin Gains are Taxable

Ironically, the IRS does not accept virtual currency as legitimate. Cryptocurrency only acts in transactions as a virtual representation of value, not actual value itself according to the IRS. That does not mean that Bitcoin is valueless—far from it, especially now—but this does add to the currency’s volatility. And although the IRS does not consider Bitcoin a real currency, they’ll be happy to tax your capital gains on profitable investments in Bitcoin.

Keep these three points in mind when considering Bitcoin or other cryptocurrencies as a possible investment:

  1. Bitcoin is High-Return, High-Risk
  2. It is specific, yet growing in use as a currency.
  3. Bitcoin is subject to taxation of crypto gains.

Though it may seem appealing now, what is more important is that your investments align with your investment purpose and risk tolerance.


How Bitcoin has Changed and Where It is Going

Bitcoin reached its peak in 2017 at $18,000 but decreased to an average of $7,000 soon after. This December, Bitcoin has reawoken and surpassed its previous record, reaching almost $24,000. We know that one reason this resurgence occurred was to hedge post-pandemic inflation. But Bitcoin is not the same as it was in 2017.

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In the past three years, Bitcoin has gained more notable investors, increasing its credibility and stabilizing the market price volatility (but only slightly—it is still a high-risk investment). Large companies like PayPal have allowed customers to buy and sell virtual currencies. This was quickly followed by big-name investors going after Bitcoin, increasing its popularity.

For example, as reported by the WSJ, Massachusetts Mutual Life Insurance Co. bought $100 million of Bitcoin for its general investment account. The investment is a tiny one for the insurance company whose general investment account totals nearly $235 billion. The Mass Mutual investment further signifies the institutionalization of Bitcoin and the cryptocurrency asset class. The price of a single Bitcoin peaked in late November at $19,835, topping its 2017 high, and currently trades around $23,500, up close to 300% year-to-date.

MassMutual purchased the Bitcoin through a New York-based digital asset management company called NYDIG, which has about $2.3 billion of Bitcoin and other cryptocurrencies under management. MassMutual also acquired a $5 million minority equity stake in NYDIG, which was formerly known as New York Digital Investment Group.

Predictions for the future of Bitcoin are varied. Some experts believe that the price will continue to rise, reaching up to $60,000 in just one year. Others think that this recent rise in price, though bigger than the last, will eventually dip as it did in 2017.

We believe Bitcoin investors need to take a long-term fundamental view on Bitcoin based on its scarcity value (limited supply) relative to growing investor demand. The supply of Bitcoin is capped by the blockchain code at 21 million. It would require network consensus to overwrite the coding language which is anathema to the value embedded in the Bitcoin network.

Currently, almost 18.6 million Bitcoins are in circulation, leaving approximately 2.4 million to be mined. The value of this “digital gold” will increase as its scarcity increases over time as fewer and fewer Bitcoins are “printed” with each successive halving until the supply is capped at 21 million. The 21 millionth Bitcoin is expected to be mined in 2140. See Bitcoin Stock-to-Flow Cross Asset Model for a more detailed look at this fundamental analysis of supply and demand.


To talk more about investing in Bitcoin, or other investment opportunities, contact us today.


Together, we can find the right investments for you that align with your values and preferences and help you to reach your financial and life goals.

Invigorating Our Mission — Re-Designing Our Website and Re-Visiting Our Values



Servant Financial Ltd. recently decided it was time to update our website. Since our initial website launch, we have consistently provided trustworthy investment advice. However, just like investment trends and approaches change over time, so has Servant Financial. We wanted to tangibly show those evolutionary and innovative aspects. A newly designed website is exactly what we needed. We soon recognized that this new website was a chance to not only invigorate our digital presence but to refocus on our purpose or raison d’etre.

When designing our website, there were three things that we wanted to make incredibly clear about who we are—integrity, compassion, and experience. These three words define Servant Financial’s mission and always have. They are what set us apart from other financial advisors. With this new website, that mission is at the forefront. We are excited to share it with you.


We want to take this opportunity not only to introduce our new website but to reintroduce ourselves and redefine our mission. Here is what integrity, compassion, and experience mean to us:

Integrity means finding our success within yours. Our goals are aligned with your goals and when you succeed, so do we. Integrity is also part of being a registered investment advisor. Unlike investment brokers, who act as salesmen, selling investment products for commissions, investment advisors provide fee-based services, providing a more transparent and trustworthy business model.  We have no hidden agendas, no small print. When we say that “your success is our success,” we truly mean it.

Compassion means making sure that you invest with purpose. Whether your purpose is to support your family, financial goals, or the environment, we make sure your investments align with your unique values and preferences. We do this by getting to know you, first and foremost, so that we understand your goals and create an investment strategy that’s a fit for you. That strategy may include ETFs (Exchange Traded Funds), ESG investments (Environmental, Social, and Governance), or alternative investments. Our portfolio recommendation will always incorporate your unique purposes and preferences.

Experience means you can trust us to guide you through your investment journey and help you reach your financial and life goals. Our years of finance experience together with access to innovative investment tools and products allow us to confidently guide you to the achievement of your goals. You have the vision, we have the tools to make that vision a reality.


As the founder of Servant Financial, I strive to live out these three qualities in my professional and personal life. I have found great satisfaction in doing so. That’s why I wanted to share this update with you and thank you for elevating our success. I understand how much you value your family, career, and community.  We share those traditional values. They are the bedrock of a purposeful and wonderful life.  As your investment advisor, I’ll make sure your values and purpose are the beating heart of your investment portfolio.


To learn more about the Servant Financial team, and what we do, please explore our brand new website and watch this video


Together, let’s invest with purpose!

Blowin’ in the Wind

The History of Wind Power

Seven thousand years ago, the Egyptians and Phoenicians used wind to power sailboats. This was the first recorded instance of  humans putting wind to work. Centuries later, the mechanical energy of windmills helped people pump water and mill grains.

Charles F. Brush invented the first electricity-producing wind turbine in 1888. To convert wind into electricity, wind spins the blades of a turbine around a rotor. The rotor then spins a generator, which creates electricity.

The average wind turbine has a capacity of 2  megawatts (one megawatt (MW) equals 1 million watts), yet innovations in technology are paving the way for wind turbine productivity to exceed 10 MW in the near future.

The Increasing Popularity of Wind Power



The global installed wind capacity from 1982 to 2017 (International Energy Initiative 2019)

Over the past four decades, wind energy grew faster than any renewable technology. The industry employs over 1 million people across the globe with installations in over 100 countries. The U.S. has six of the ten largest onshore wind farms in the world.

By the first quarter of 2020, the United States reached an installed capacity of approximately 107 gigawatts (GW), enough energy to power over 32 million American homes (one GW is equivalent to 1,000 MW and can power 750,000 homes annually). The U.S. has the second largest wind energy capacity in the world, still trailing far behind China’s installed capacity of 221 GW.

In 2019, wind power provided 7% of the United States’ electricity, making it the most prevalent source of renewable energy in the country. The U.S. installed an additional 9 GW of wind power that year. Those installations represented 39% of the nation’s new utility-scale power.

The U.S. wind industry installed 1,821 MW of new wind power capacity in the first quarter of 2020, a 117% increase over the first quarter of 2019 (American Wind Energy Association)

Texas has an installed wind power capacity of 29 GW. Texas wind power represents 27% of the nation’s installed wind capacity, over three times greater than any other U.S. state. Its large capacity can be attributed to its location within a wind corridor — a region characterized by high-speed winds stretching from the upper Great Plains to western Texas.

Non-hydro renewables in the U.S. increased from less than 1% in 2005 to nearly 10.1% by the end of 2018. This growth occurred during a time of relatively stable electricity demand. Such growth illustrates renewable energy’s disruptive effect on the electricity industry. The Center for Climate and Energy Solutions projects that the national energy share of the United States’ renewable energy — including hydroelectric — will increase from a value of 17.1% in 2018 to 24% in 2030.


Growth Potential of the Offshore Wind Sector

Wind turbines can be constructed on land, offshore in the ocean, or on big lakes. In 1991, Vindeby Offshore Wind Farm in Denmark became the world’s first offshore operation. Offshore wind power is more powerful than onshore wind power because of exposure to more consistent coastal winds. The largest, most powerful offshore wind turbine is GE’s Haliade-X 12 MW turbine.

The United States has an enormous opportunity to capitalize on coastal territories and grow its tiny offshore wind sector. The Block Island Wind Farm is the nation’s only offshore wind farm: a 30 MW, five turbine operation established in 2016 off the coast of Rhode Island.

According to the Office of Energy Efficiency & Renewable Energy, over 2,000 GW of wind power could be accessed along the coasts of the United States and the Great Lakes. This 2,000 GW potential represents an electricity generation capacity that doubles the current capacity of all U.S. electric power plants.

The Department of Energy allocated over $200 million dollars towards competitively-selected offshore wind research, development, and demonstration projects. Over 58% of U.S. offshore wind resources are located in deep waters. Without a doubt, a key focus area will be development of offshore wind platforms suitable for deep waters.


Floating vertical-axis wind turbine platforms (Office of Energy Efficiency and Renewable Energy)

Advantages of Wind Power

Wind energy is a sustainable, emissions-free power source that does not depend on fossil fuels. In 2019, approximately 42 million cars’ worth of yearly emissions was avoided through wind energy generation. Typical wind projects can offset their carbon footprint in six months or less (carbon offsets work by reducing emissions of carbon dioxide or other greenhouse gases in order to compensate for emissions made in manufacturing and citing the wind farm).

In 2018, carbon dioxide (CO2) emissions from fossil fuel combustion for energy represented about 75% of total U.S. anthropogenic (originating from human activity) greenhouse gas emissions and about 93% of total U.S. anthropogenic CO2 emissions. Greenhouse gases (GHGs) like CO2 trap heat and alter the transfer of infrared energy through the atmosphere. The earth’s global average temperature is rising because of increased atmospheric concentrations of GHGs.

According to NASA, there is greater than a 95% probability that Earth’s current warming trend is the result of human activity since the mid-20th century — a trend accelerating at a rate unmatched over millennia. Zero-emissions energy sources like wind power are necessary and urgent solutions to mitigate climate change.


NASA: Based on the comparison of atmospheric samples contained in ice cores and more recent direct measurements, atmospheric CO2 has increased since the Industrial Revolution (NOAA)

Wind power saves water and is better for the environment. Conventional fossil fuel plants use billions of gallons of water a year. In addition, contaminated water from fossil fuel plants pollutes nearby waterways and marine ecosystems. On the contrary, wind power is a clean energy source that does not need water to produce electricity.

According to the Wind Powers America Annual Report 2019, the expansion of wind power in America has generated positive economic benefits. It has provided jobs to over 120,000 people across all 50 states, supported 530 domestic factories, and generated $1.6 billion a year in state and local taxes and landowner lease payments.

Growing wind and renewable energy operations in the United States will contribute to energy independence and national security. Renewable power presents a dependable, domestic energy source free from the risks associated with foreign energy sources or supply chains. It will also help support more self-sustaining, domestic microgrids. This technology can provide electricity in natural disasters or situations that require power for national defense operations.

Wind power is less prone to harmful, life-threatening malfunctions than other energy sources. Some examples include nuclear disasters like Chernobyl in 1986 or Fukushima in 2011, the 2009 accident at Sayano Shushenskaya Dam, petroleum oil spills, and coal mining accidents.

Drawbacks of Wind Power

Though no emissions are produced during wind energy operations, there are still negative environmental impacts incurred during manufacturing, transport, installation, and maintenance processes. A circular economy approach can help mitigate environmental burdens by using cleaner and higher quality recovered carbon fiber building materials that can be recycled and reused.

Wind turbines pose a risk to birds or bats that might collide with the sharp, fast-moving blades of the turbine. The U.S. Fish and Wildlife Service estimates that between 140,000 and 500,000 bird deaths occur at wind farms each year. One solution being used to decrease bird fatalities is painting one turbine blade black.

This chart shows the annual estimated bird mortality for selected anthropogenic causes in the U.S. (US Fish and Wildlife Service)

Wind turbines are not the largest threat to the survival of birds and bats. In fact, collisions with buildings, communication towers, vehicles, powerlines, and other manmade installations cause more bird and bat deaths. Other risks associated with wind turbines include blade icing and oil leaks. However, proper maintenance and technological innovations help avoid these problems.

Wind turbines have generated noise complaints from nearby homeowners. However, a typical wind turbine produces a noise level of about 50 decibels (dB). This noise level is similar to that of a midsize window air conditioner or a car going 60 km/h. It is uncommon to build a wind turbine within 300 meters to the nearest home.

The Not in My Backyard, or NIMBY, Syndrome is another consequence of wind turbine installation. Many homeowners support renewable energy yet resent nearby wind turbines. Turbines can decrease property values or block surrounding views.

This graphic by GE provides context about wind turbine noise (decibels) versus distance (meters)

Investing in Wind Energy

Global investment in renewable energy hit a record high of $282.2 billion in 2019. This represented a 1% increase from global spending in 2018 and an additional 180 GW of global renewable energy capacity. Furthermore, declining costs of wind and solar bolstered renewable energy growth.

The International Renewable Energy Agency (IRENA) claims investing $130 trillion over the next 30 years towards renewable energy systems would provide economic benefits three to eight times the amount of those investments.

IRENA’s 2020 Global Renewables Outlook report highlights sustainable investment options and policies that will pave the path towards a cleaner energy system. Its recommendations align with goals set by countries involved in the 2015 Paris Agreement to limit global warming to well below 2 degrees Celsius above pre-industrial levels and hold it to 1.5 degrees Celsius.

IRENA’s report predicts that increased investments on renewables could quadruple global jobs in the industry to 42 million by 2050. Energy efficiency measures would create 21 million jobs and system flexibility measures (measures that support the capability to change power supply and demand of the system as a whole or a particular unit such as flexible generation, stronger transmission and distribution systems, increasing storage capacity and demand-side management) could produce 15 million additional jobs.

Wind and solar projects represented 99% of the $55.5 billion invested in U.S. renewable energy capacity investment in 2019. Renewable energy companies scrambling to qualify for federal tax credits were key players in the nation’s clean energy investment growth.

Wind energy projects are very competitive from a levelized cost of production standpoint. Over 50% of the renewable energy capacity added in 2019 had lower electricity costs than new coal. The global weighted-average cost of electricity of new onshore wind farms in 2019 was $0.053 per kilowatt hour (kWh). The most competitive projects can dip to as low as $0.030 per kWh, without financial support from the government.


Investing in Wind, Renewables, and Clean Technology with ACES

Increased utilization of wind power and renewable energy will be one of the most critical steps towards carbon neutrality. Renewable energy alone will not suffice in achieving global decarbonization goals: innovations in energy efficiency and storage like lithium ion batteries and smart grid technologies will be essential in making strides towards comprehensive clean energy.

The future of wind power and renewable energy presents compelling investment opportunities. In addition, these opportunities align with client ESG preferences. We believe ALPS Clean Energy ETF (ACES) is the most efficient, broadly diversified approach to play the decarbonization megatrend of the next decade and beyond.

ACES contains two categories of constituents in the U.S. and Canada that operate in the clean energy sector. Renewable energy is the first category, including companies that focus  on wind, solar, hydro, geothermal, biomass, and biofuel. The second category is clean technology. It includes companies that develop electric vehicles, energy storage, efficiency, light-emitting diode (LED), smart grid, and fuel cells.

These charts summarize ACES’ portfolio composition based upon sector (utilities, industrials, etc.) and decarbonization themes (wind, smart grid technologies, etc.)

ACES is a differentiated, pure-play approach to the decarbonization trend. ACES concentrates on companies whose primary operations focus on the clean energy sector. It is an ETF that diversifies across sub-segments and aligns with ESG standards.

Invest with purpose. If you want to invest in a healthier planet for current and future generations, we encourage you to invest in renewables like wind power through ACES. Your next investment opportunity might be blowing in the wind.


To talk more about investing in wind power, or other investment opportunities, contact us today. Together, we can find the right investments for you, the ones that align with your values and help you to reach your financial and life goals.

Go with the Flow — Investing in Hydropower


What is Hydropower?

Hydropower is a type of renewable energy that uses the force of flowing water to produce electricity. Its energy comes from the water cycle: the continuous movement of water on, above, and below earth’s surface.

Hydropower is a renewable technology because it captures naturally occurring energy from the water cycle and produces electricity without reducing or using up water. The marginal cost of production for hydropower — and renewables like solar, wind, and geothermal energy — is zero.

Check out this 3-minute video on hydropower.

The most common type of hydropower production is an impoundment facility. Impoundment dams hold river water until its release through a turbine that activates a generator and produces electricity. The U.S. has over 90,000 dams, yet only 3% are active hydropower facilities. The majority of dams in the United States were built for irrigation or flood control purposes.

In 2019, conventional hydroelectricity’s generation capacity in the United States was 79,746 megawatts (MW) — or about 80 million kilowatts. This is enough electricity to fuel 32 million homes a year. The state of Washington produces the most energy from impoundment. It is home to the Grand Coulee Dam, the largest U.S. hydropower facility. The dam is also the largest U.S. power plant in generation capacity.

Dams are controversial because of potential harmful environmental impact. They destroy carbon sinks in wetlands and oceans, deprive ecosystems of nutrients, reduce biodiversity, cause habitat fragmentation, and displace poor communities. Fish ladders — a series of ascending pools that allow fish to circumvent a dam — are a solution to impoundment facilities that would otherwise hinder the migration of species like salmon up and down rivers.

Another type of hydroelectric power is diversion, also known as a run-of-river facility. This method diverts part of a stream through a canal or penstock. The water then spins a turbine and produces electricity before rejoining the main river. The typical capacity of a diversion facility is less than 30 MW.

Both small individual operators and large utilities own run-of -river facilities. In some cases, large utilities view these facilities as low value assets due to old equipment, inefficient operations and low power prices.

Pumped storage facilities store energy for later use by pumping water uphill when electricity is cheap to a reservoir at higher elevation. When there is high electricity demand, they release water to a lower reservoir and through a turbine to generate electricity.

Hydro operations can operate under federal, public, or private ownership. There can also be public-private and public-federal partnerships. Federal agencies operate about half of the total installed hydropower capacity in the U.S.


Hydropower accounts for around 6.6% of the electricity generated in the United States. Hydropower was the nation’s largest source of renewable energy until wind power surpassed it in 2019. According to the U.S. Energy Information Administration, total annual electricity generation from utility-scale non-hydro renewable sources (wind, solar, biomass, etc.) has been greater than hydropower generation since 2014.

Total renewable energy resources represent 17% of U.S. electricity generation. Dirty coal still represents 23% of generation and is a major contributor to greenhouse gases. Renewable energy sources are poised to take coal’s market share aided by technological advances in energy storage.


Advantages of Hydropower

Hydropower offers the lowest levelized cost of electricity across all major fossil fuel and renewable energy sources. Hydro is a reliable, cost-effective energy source due to low-maintenance equipment and longer facility lifespans that amortize significantly large upfront capital costs over time.

The total conversion efficiency of a hydropower plant ranges between 90-95%. Conversion efficiency is the useful energy output divided by the energy input. For hydro, it is the hydroelectricity output divided by the kinetic energy of flowing water input. Hydropower’s conversion efficiency is greater than the conversion efficiency of both wind and solar, with wind at a rate of about 45% and solar at 25%.

Hydropower has high diversification potential with other renewable energies. A portfolio with hydro, wind, and solar energy that is diversified across energy sources and regions can have a stabilizing effect on asset portfolios.

Hydroelectric facilities provide baseload power; they run continuously to meet the minimum level of power demand. This consistency makes hydropower complementary to intermittent renewables like wind and solar that can only generate electricity when the sun is shining or the wind is blowing. Hydropower depends on the more reliable flow of water to help meet baseline electricity demands while other renewables can supply peak demands.

Hydropower and Renewable Energy Storage

The push for decarbonization through renewables will require innovation in energy storage technologies that addresses the intermittencies of wind and solar energy. While pumped-storage hydropower accounts for 95% of U.S. utility-scale energy storage, lithium-ion battery storage has seen tremendous growth. The price of lithium-ion batteries has fallen by about 80% over the past five years, enabling the integration of storage into solar power systems.

NREL’s Renewable Electricity Futures Study estimated that if 80% of the United States’ electricity is powered by renewables by 2050, 120 gigawatts of storage would be needed across the nation. The U.S. currently has 22 gigawatts of storage from pumped hydropower and 1 gigawatt from batteries.

Another opportunity looming on the hydro horizon is the potential coupling of hydropower and Bitcoin mining. Bitcoin mining lacks an eco-friendly reputation as an energy-intensive process with a large carbon footprint. However, this can change if miners use electricity from renewable sources.

Much like energy storage utilizing lithium-ion batteries, Bitcoin and other cryptocurrencies are an energy storage technology. Converting energy into bitcoins and storing it for future purchases can help contribute to the storage needed for the renewable energy revolution.

Bitcoin miners can choose their location based on the cheapest cost of electricity. Cheap electricity happens to come from cleaner baseload energy sources like hydro, geothermal, and natural gas. If Bitcoin miners settle near renewable energy plants, they could reduce their emissions and soak up extra energy that would go to waste.

Go with the Flow — Investing in Hydro

Current trends show wind and solar energy assets are more frequently represented in institutional investors’ portfolios than hydropower assets. Hydropower facilities tend to have high upfront costs, complex installation processes, and absence from the market due to a history of public ownership and project sponsorship. These are some of the factors that create a scarcity of hydroelectric investment opportunities.

Brookfield Renewable (BEPC: NYSE) is one of the world’s largest investors in renewable energy. Its strong ESG practices support global decarbonization and create long-term value for stakeholders. In addition, it is geographically and technologically diversified.

There is 19,300 MW of renewable capacity located across North America, South America, Europe, India, and China. Hydro represents 7,900 MW (53% in U.S. & Canada), or 41% of capacity, followed by 4,700 MW of wind (52% in U.S. & Canada), 2,600 MW of solar, and 2,600 MW of energy storage and distribution assets.

Brookfield has an investment grade, BBB+ balance sheet. It has diverse, high-quality cash flows and a strong financial position. In effect, it can pursue growth opportunities and make distributions to shareholders. Brookfield targets annual equity deployment of $800 million in high-quality assets.

Their investment strategy involves acquisition and development of high-quality renewable power assets and businesses below intrinsic value. They also recycle capital from mature, de-risked assets, optimize cash flows through operating expertise to enhance value, and finance businesses on an investment grade basis.

Brookfield partners with governments and businesses to achieve their decarbonization goals. It has an 18,000 MW development pipeline diversified across multiple technologies and geographies, including approximately 2,400 MW under construction.

Since 2012, Brookfield EPC has grown its annual distribution by 6% compound annual growth rate. Brookfield expects to continue distribution growth by 5% to 9% annually. In addition, they deliver total returns of 12% to 15% to unitholders over the long-term.

Brookfield is the best way to go with the flow on the decarbonization megatrend and invest in the inevitable transition to renewable hydro, wind and solar energy.


To talk more about investing in hydropower, or other investment opportunities, contact us today. Together, we can find the right investments for you, the ones that align with your values and help you to reach your financial and life goals.