The term “green energy” refers to the benign environmental impact of fuel sources, such as wind and solar, that President Barack Obama promoted in a speech on Tuesday. It does not refer to that industry’s investment returns, which have been awful over the long haul.

The three U.S. domestic mutual funds that focus on green energy gained more than 20 percent in the 12 months through Tuesday. That still left them with five-year losses ranging from about 50 percent to 80 percent, compared to a decline of just over 10 percent in Energy Select Sector SPDR, an exchange-traded fund that holds traditional energy stocks.

But investors continue to be drawn to the niche, sometimes through private investment vehicles that can be less than legitimate. The North American Securities Administrators Association, a financial regulators’ organization, recently warned of a proliferation in “green energy” investment scams.

“In some cases, the promoters may be operating a fraudulent shell company and not producing anything,” the warning said.

Over the last few months, the organization reported, fraudsters were convicted and in some cases sent to prison for selling stakes in nonexistent oil and gas projects in North Dakota to two elderly Texas women; stealing more than $10 million in Missouri from thousands of investors in a bogus energy company and peddling unregistered securities, including oil futures contracts, in Ohio.

Even when everything is legit and companies do produce something, it has seldom been profitable. Renewable energy advocates expect that to change. Hurdles like intense price competition and comparatively high production costs are being cleared or dropping away, they contend, and that makes the stocks promising, albeit risky, assets.

Solar Stock Picks

Solar energy shares have endured a deep, prolonged slump because of a “ruinous price war on solar panels” that has helped drive stocks sharply lower, said Kevin Landis, manager of the Firsthand Alternative Energy Fund, the best of the specialist mutual funds over five years. A sign for him that the pressure is abating is that authorities in China, which rarely lets companies go bankrupt and where many solar manufacturers are based, have let some go under. That is expected to bolster prices.

The survivors will be in much better shape to compete sensibly with one another, in Landis’ view, especially JA Solar Holdings Co. Ltd and Yingli Green Energy Holding Co. Ltd., along with their American rival SunPower Corp. All three are in his portfolio.

A holding he favors more than the panel manufacturers is SolarCity Corp. SolarCity buys panels and installs them for customers that then buy electricity from the company. That makes it a de facto utility and a “pure play” on rising solar power use, Landis said. He expects it to be a major beneficiary of the ebbing price war.

Landis declined to specify target prices or other criteria for selling any of the stocks he mentioned and currently holds, but his record shows him to be strictly a buy-and-hold investor. His portfolio has an annual turnover rate of 10 percent, which works out to an average holding period of 10 years for the nearly six-year-old fund.

SolarCity aims to profit by selling electricity generated by the panels at moderately lower rates than customers would pay a conventional utility. So far the company is running at a loss, but investors have been betting on that plan: The stock has tripled in 2013. It started the year at $11.93 a share, topped $50 last month, and closed at $36.01 on Tuesday.

Ormat Technologies Inc, a company involved in geothermal energy, has gone nowhere over the same time, but it’s on a list of top stock picks at Morningstar. Stephen Simko, an energy analyst at the independent research firm, estimates fair value for Ormat at $27 a share, based on financial results, conversations with management and commodity price forecasts; it closed Tuesday at $22.54.

Simko likes geothermal, which derives power from the Earth’s natural heat. Like the energy production itself, Ormat’s stock is more stable than those of solar panel makers, he added.

“It trades with less volatility and has a little less risky profile than solar companies,” he said