Kermit the Frog lamented the difficulties of being green. Chances are, his financial adviser might have sung the same song.

Kermit the Frog lamented the difficulties of being green. Chances are, his financial adviser might have sung the same song.

Investing in companies that develop environmentally friendly products or technologies — so-called green businesses — might be an area of growing interest but the opportunities for this kind of investment haven't always kept pace with investors' appetites. Some investors looking to make money in mutual funds while going green might prefer to wait as more of these companies emerge.

Maurice Schoenwald, of the New Alternatives Fund, a big player among environmentally focused mutual funds, said burgeoning demand for environmentally focused investments is a good thing but can require a broad search for the best investments.

"People are getting concerned about the environment and about fuel," said Schoenwald, who at age 87 helps his son oversee the fund. He noted that interest in protecting the environment has lagged in the United States compared with much of Europe and parts of Asia.

Many companies are still startups with unproven technologies and are unlikely to yet draw the interest of mutual funds.

That's not to say there isn't money to be made. The New Alternatives Fund showed a 33 percent return last year and was up another 12 percent in the first quarter of this year. With assets of around $180 million, Schoenwald said the company is careful about where it invests, limiting initial stakes to less than 5 percent of a company's shares. The fund, which has holdings in about 45 companies, often parks some of its money in Treasury bills in part as it determines its next move.

The New Alternatives Fund and like-minded funds often look to places like Europe for investments. Countries such as Germany, Spain and Denmark have made a push to foster environmentally focused companies, such as alternative energy companies looking for ways to avoid contributing to global warming.

"At higher oil prices, suddenly all of these alternative energy technologies can suddenly become economically viable at this higher cost because now they have to compete with $60 to $70 oil," said Matthew Page, an analyst in London at Guinness Atkinson Alternative Energy Fund, referring to the price of a barrel of oil.

"Solar is at such a small base at the moment but has the capacity to grow very very quickly. Solar has been driven very much so by Japan and Germany," he said, referring to one slice of the fund's investments.

Some observers say companies engaging in largely environmental pursuits still need to grow before they will become suitable investments for funds.

"I think the technology has not caught up with the sentiment," said Jeff Tjornehoj, an analyst at Lipper Inc., which tracks funds.

He noted that environmentally focused funds are part of a larger group known as socially responsible funds whose assets make up slightly more than 0.5 percent of all mutual funds.

"There are just not that many good-sized publicly traded companies pursuing alternative energy in a way that is meaningful to the marketplace," Tjornehoj said, referring to one notable branch of environmentally focused companies.

In addition, the fortunes of such companies can be swayed by shifting sentiments.

In 2000, for example, the New Alternatives Fund rose sharply amid the energy crunch in California and in 2001 and 2002 fell along with the broader market. But it benefited last year as oil prices rose in the first half of the year.

"The share price of these companies rises and falls with government budget decisions and not so much about what the market is doing. Many of them are very dependent on government grants," Tjornehoj noted.

Despite the attendant vagaries of investing in environmentally focused companies, Wall Street seems interested in adding to investors' choices. On May 9, Van Eck Global introduced its Global Alternative Energy exchange-traded fund. The ETF invests in companies that draw more than half of their revenue from the alternative energy sector.

ETFs are like mutual funds but their shares are listed on an exchange and can be traded throughout the day.

Adam Phillips, director of ETF strategy at Van Eck, said prospects for such investments are brightening as the companies grow stronger. He noted that about 3 out of 4 companies included in the Global Alternative Energy ETF turn a profit.

"There are a lot of things that the world is just beginning to have to deal with and these are companies that are coming up with great ways (to do so) and technologies that are highly profitable."