ACES - 5 Clean Energy ETFs for Investors to Consider
Exchange-traded funds (ETFs) have been gaining popularity in North America in a wide range of industries, including clean energy ETFs.
ETF inflows have reached record levels in recent years. So far, 2017 reigns as the highest year on record for US listed ETF inflows, totaling US$476.1 billion. 2019 was also a big year for ETFs. More than US$326.3 billion flowed into ETFs last year, making it the second highest record level of annual ETF inflows.
Analysts are projecting another record year for ETF inflows in 2020. Already in the first half of the year, investors have put over US$200 billion into ETFs.
Investing in clean energy ETFs rather than a single company is a safer way for investors to gain exposure to the clean energy industry, with the benefit of lower risks and less volatility.
Below is an overview of the five top clean energy ETFs for investor consideration, ranked by total assets under management (AUM). All numbers and figures were current as of July 28, 2020, according to ETFdb.com.
1. iShares Global Clean Energy ETF (NASDAQ:ICLN)
AUM: US$926.5 million
The iShares Global Clean Energy ETF was created on June 24, 2008, and has a large portfolio with domestic and international stocks in its holdings.
An analyst report on the ETF states that the fund “likely doesn’t deserve” a large weighting in an investor’s long-term portfolio. It suggests that the fund could be useful as a “satellite holding” that looks at a fraction of the market that is often overlooked by less focused ETFs.
As it currently stands, the iShares Global Clean Energy ETF’s three top weighted holdings are: Sunrun (NASDAQ:RUN) with a 6.48 percent weighting, Solaredge Technologies (NASDAQ:SEDG) at 6.12 percent and Enphase Energy (NASDAQ:ENPH) with a 5.34 percent weighting.
2. Invesco Wilderhill Clean Energy ETF (ARCA:PBW)
AUM: US$467.62 million
Begun on March 3, 2005, the Invesco Wilderhill Clean Energy ETF provides a “unique way to play the clean energy industry,” because it focus on clean energy companies with greener and renewable energy and technologies that “facilitate cleaner energy.”
Currently this ETF’s top weighted holdings include Vivant Solar Inc (NYSE:VSLR) at 4.52 percent, Sunrun at 4.21 percent and Bloom Energy (NYSE:BE) at 3.76 percent.
3. First Trust NASDAQ Clean Edge Green Energy ETF (NASDAQ:QCLN)
AUM: US$321.12 million
The First Trust NASDAQ Clean Edge Green Energy ETF, which officially came into existence on February 14, 2007, is a “unique member” of the alternative energy category, according to ETFdb.com. Why? Because it invests in companies that have interests in different green energy subsectors, such as biofuels, solar energy and advanced batteries.
ETFdb.com also states that because of the ETF’s focus it may be appealing to investors looking for broader exposure in the alternative energy sector. The ETF’s three highest weighted holdings are Tesla (NASDAQ:TSLA) at 11.07 percent, NIO (NYSE:NIO) at 5.86 percent and Brookfield Renewable Partners (NYSE:BEP) at 5.65 percent.
4. ALPS Clean Energy (EDGX:ACES)
AUM: US$269.79 million
ALPS Clean Energy was formed recently, on June 29, 2018. The majority of the companies in this ETF are based in North America.
ALPS Clean Energy’s top three holdings include Tesla, Sunrun and First Solar (NASDAQ:FSLR) with weightings of 7.28 percent, 6.01 percent and 5.08 percent, respectively.
5. VanEck Vectors Low Carbon Energy ETF (ARCA:SMOG)
AUM: US$131.25 million
The VanEck Vectors Low Carbon Energy ETF has been around for several years, having launched in May of 2007. Prior to July 9, 2019 the fund name was VanEck Vestors Global Alternative Energy ETF with the ticker GEX.
This ETF tracks a wide spectrum of companies that earn at least half of their revenues from alternative energy industries, including solar power, wind power and other renewable energy sources as well as electric vehicles.
The fund currently tracks 31 holdings. The top three by weight are Tesla at a 11.76 percent weighting, Vestas Wind Systems (OTC Pink:VWSYF,CPH:VWS) at 9.71 percent and Eaton Corporation (NYSE:ETN) at a 8.30 percent weighting.
This is an updated version of an article originally published by the Investing News Network in 2018.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.