With interest in ETFs on the rise, now may be the time for environmentally minded investors to think about 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. But 2019 was also a big year for ETFs — more than US$326.3 billion flowed into ETFs that year, resulting in the second highest annual level of ETF inflows.
Analysts are projecting another record-setting year for ETF inflows in 2020. Already in the first half of the year, investors have put over US$200 billion into ETFs.
In terms of clean energy ETFs, they are a safe way for investors to gain exposure to the clean energy industry while avoiding the volatility that comes with investing in individual stocks.
Below is a look at the five top clean energy ETFs to consider, ranked by total assets under management (AUM). All numbers and figures were gathered using ETFdb.com and were current as of July 28, 2020.
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 focuses on clean energy companies using green and renewable energy and technologies that “facilitate cleaner energy.”
3. First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN)
AUM: US$321.12 million
The First Trust NASDAQ Clean Edge Green Energy Index Fund, 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 this ETF’s focus it may be appealing to investors looking for broader exposure in the alternative energy sector. Its 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 ETF (EDGX:ACES)
AUM: US$269.79 million
The ALPS Clean Energy ETF was formed recently, on June 29, 2018. The majority of the companies in this ETF are based in North America.
The top three holdings of the ETF are 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, since May 2007. Prior to July 9, 2019, the fund was called the VanEck Vectors 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 and wind power, as well as electric vehicles.
The fund currently tracks 31 holdings. The top three by weight are Tesla at 11.76 percent, Vestas Wind Systems (OTC Pink:VWSYF,CPH:VWS) at 9.71 percent and Eaton (NYSE:ETN) at an 8.3 percent weighting.
This is an updated version of an article originally published by the Investing News Network in 2018.
Don’t forget to follow us @INN_Technology for real-time news updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.