Invest in a closed-end interval fund that invests in solar loans and related assets.
Many institutional and high net worth investors look toward alternative investments to diversify their portfolios and increase their risk-adjusted returns. At the same time, many alternative asset managers are incorporating renewable energy and other impact assets into their portfolios, enabling investors to align their money with their values.
The Finite Solar Finance Fund (SOLRX) makes it easy for non-accredited investors to participate in alternative solar investments, diversifying their portfolio and making a more significant impact.
Who's Behind Finite?
Finite is a Santa Monica-based fund manager founded in 2019 to enable anyone to invest in climate change solutions. The company's flagship Finite Solar Finance Fund (SOLRX) provides solar energy installers with faster access to capital to get solar projects off the ground faster and accelerate the transition to renewable energy.
President and Founder Kevin Conroy began his career with JP Morgan's investment bank focusing on corporate restructuring. He later became Product Manager at Dividend Finance, one of the nation's largest residential solar loan originators, before founding Finite to lead its strategic and long-term initiatives.
In addition to the SOLRX Fund, the company is exploring investments in climate venture funds, wastewater treatment, advanced transportation, energy-efficient buildings, and sustainable agriculture.
What is the SOLRX Fund?
Finite's flagship product is The Finite Solar Finance Fund (SOLRX), a closed-end interval fund that invests in solar assets. The term "closed-end" means that the fund issues a fixed number of shares, while "interval" means that it offers periodic redemptions. In particular, the fund may offer to repurchase 5% to 25% of outstanding shares each quarter.
The SOLRX Fund has a $500 minimum investment, making it accessible to many retail investors. The fund managers charge a 1.25% annual management fee, equivalent to many mutual funds but higher than many exchange-traded funds (ETFs). That said, investing in alternative assets tends to be more difficult than maintaining a portfolio of stocks.
The fund's closed-end structure also enables it to provide investors with Form 1099-DIVs each year rather than more complex Schedule K-1s (e.g., partnership agreements).
The SOLRX Fund invests in several types of solar assets:
- Solar Loans & Loan Pools – The fund invests about 80% of its total assets in loans made to individuals (40%) and businesses (40%) to finance the development, purchase, and installation of solar energy systems. These investments produce most of the fund's anticipated yield paid out to investors as current income.
- Equity & Debt – The fund invests 20% of its assets in the equity (10%) and debt (10%) securities of public or private companies that derive at least 50% of their assets, income, sales, or profits from solar energy-related activities. These investments offer a lower yield than solar loans but provide liquidity for redemptions.
The SOLRX Fund hasn't provided any specific performance data, but coupon rates from a benchmark index of target assets were 5% to 10%, which is more than two times higher than conventional bonds. According to the fund's investor presentation, residential solar loans return 6.73% in the current environment, outperforming high-yield corporate bonds.
Should You Invest?
Finite's Solar Finance Fund (SOLRX) provides a rare combination of impact, liquidity, and yield. With a better return than conventional bonds, you may want to consider the fund for the fixed-income portion of your portfolio. However, the fund is concentrated in solar energy and may have a higher risk than blue chip bond funds.
While the 1.25% expense ratio is higher than many conventional funds, SOLRX offers unique exposure to the solar industry and the ability to make a direct impact. As a result, you should consider whether the higher cost offsets the impact and financial benefits. And ultimately, that may depend on the fund's long-term yields.
The Bottom Line
Finite plans on launching a series of closed-end interval funds, making it easier for non-accredited investors to participate in impact investments. The company's flagship Finite Solar Finance Fund (SOLRX) enables anyone to invest in solar loans and other assets with as little as $500, making both an impact and an attractive return.
Discover More Ways to Make an Impact
Sign up for our High Yield Impact newsletter for weekly ideas and strategies in your inbox.
Leave a Review
Dec 04, 2023
Learn MoreVisit Website
0out of 5 stars
Impact FocusRenewable Energy
- Invest in solar loans with as little as $500.
- Generative attractive income while supporting the transition to renewables.