NEW YORK ( TheStreet) -- Alternative energy is in a transition between downturn and growth, making industries such as solar attractive for long-term investors, says Anna Davydova, who helps manage the Fidelity Select Environment and Alternative Energy Fund ( FSLEX).The mutual fund has fallen 7.1% this year, compared with a decline of 16% for its peer group. The Fidelity Select Environment and Alternative Energy Fund has beaten the S&P 500 Index in seven of the past 10 years. Welcome to TheStreet.com's Fund Manager Five Spot, where America's top mutual fund managers give their best stock picks and views on the market in a five-question format. How bullish are you on alternative energy? Davydova: I'm bullish on the environment and alternative energy sector in the long term. I also pay close attention to sector-specific cyclicality, as it can outweigh the secular drivers over periods of time. This is what we've experienced more recently with the group succumbing to cyclical pressures due, in part, to economic weakness and the low costs of fossil-fuel electricity. However, I expect some of these pressures to ease as we progress through the economic cycle. Overall, I believe that these cyclical speed bumps tend to offer good buying opportunities for patient investors. Longer term, I see three secular drivers for the sector. First is the industrialization of massive populations in the emerging markets. As countries such as India and China continue to develop, their increased resource consumption will put an incredible strain on existing supplies. I believe this will drive the global need for a more diverse and sustainable energy portfolio, as well as increased focus on energy independence and pollution control as concerns about air and water quality rise. This ties in with the second secular driver, which is the political and social focus on environmental protection and reduction in fossil-fuel emissions. All over the world, people are concerned about the consequences of fossil-fuel consumption for their health and the environment. Investors need to look no further than the Gulf of Mexico oil spill or the coal-mine disaster in West Virginia for evidence of this trend. The third driver is the rapidly developing technologies that will support positive environmental change and more compelling energy solutions. So, in the long run, I expect to see continued growth in this space, with some cyclical fluctuations, and see a number of attractive investment opportunities.
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