Background. Oil prices are high and likely to stay high. Under-investment in exploration by the West has produced a potential threat to world growth via higher energy costs. However, the wild card is the disruption to supplies either through geopolitical events or the opacity of the swing-producer's supply stream (see leading American oil expert Matthew Simmonds' report on oil depletion through water injection in Saudi oil wells).

The opportunity. Alternative energy sectors should be able to generate annual returns of 15-20% for many years. Currently, only around $20bn a year is invested worldwide in renewable energy capacity; mainly wind and solar, with some in biomass and bio fuels. A further $5bn is spent on research each year, particularly into hydrogen and fuel cells. But that figure is bound to grow to over $100bn within a decade - a sustained compound annual growth rate of 15-20%. That means there will be opportunities to make money provided investors make the right choice. The first London stockbroker recently announced it would hire a dedicated renewable energy analyst, saying that it "feels that this relatively new and under researched sector will develop into a core sector for both traditional and socially responsible investors alike".

Ways to play the theme. Global energy funds, global alternative energy funds. Must be global as local knowledge is too coloured by local "success stories". Avoid country approaches (eg Canada). Very few candidate funds despite recent rise in oil price. Possible opportunities in direct shareholdings as oil and energy is very factor specific (less so for diversified oils and majors than for mid caps and explorers).

Particular factor skills required of selected managers. Global knowledge and database to compare asset and production values in producers. Geopolitical grasp and contacts. Some technical, hydrocarbon or petroleum industries experience an added plus.