With interest in ETFs on the rise, now may be the time to think about adding clean energy ETFs to your portfolio.
2018 in particular was a big year for the Canadian ETF industry, says Franklin Templeton Investments Canada. In January, the firm published a report that shows the sector attracted C$20 billion in net inflows. Further, the market saw 140 new ETF solutions from 33 Canadian providers.
The Investment Funds Institute of Canada (IFIC) revealed that ETFs represented C$156.7 billion of the C$1.58 trillion making up Canadian investment fund assets at the end of 2018. In total, 33 investment funds offered ETFs last year, more than double the amount seen in the previous three year period.
Investing in clean energy ETFs is a safe way for investors to put their money into an overarching industry rather than a single company, 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. All numbers and figures were current as of May 8, 2019, according to ETFdb.com.
1. iShares Global Clean Energy ETF (NASDAQ:ICLN)
Market cap: US$226.02 million; current price: US$10.09
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 tracks 33 holdings, with its three top weighted holdings being: Siemens Gamesa Renewable Energy (OTC Pink:GCTAF,BME:SGRE) with a 5.19 percent weighting, Ormat Technologies (NYSE:ORA) at 5.1 percent and Vestas Wind Systems (OTC Pink:VWSYF,CPH:VWS) with a 5.03 percent weighting.
2. Invesco Wilderhill Clean Energy ETF (ARCA:PBW)
Market cap: US$148.14 million; current price: US$28.38
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 companies with greener and renewable sources of energy and technologies that “facilitate cleaner energy.”
Currently this ETF tracks 39 holdings, with its top weighted ones being Enphase Energy (NASDAQ:ENPH) at 4.16 percent, First Solar (NASDAQ:FSLR) at 3.43 percent and DAQO New Energy (NYSE:DQ) at 3.41 percent.
3. First Trust NASDAQ Clean Edge Green Energy ETF (NASDAQ:QCLN)
Market cap: US$102.31 million; current price: US$20.87
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 energies 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 tracks 42 holdings, with the three highest weighted holdings being ON Semiconductor (NASDAQ:ON) at 8.29 percent, Universal Display (NASDAQ:OLED) at 6.63 percent and Albemarle (NYSE:ALB) at 6.54 percent.
4. VanEck Vectors Global Alternative Energy ETF (ARCA:GEX)
Market cap: US$88.99 million; current price: US$64.33
The VanEck Vectors Global Alternative Energy ETF is another ETF that’s been around for over a decade, having been incepted on May 9, 2007. This ETF tracks companies engaged in a range of alternative energy industries, including solar power, wind power and other renewable energy sources.
An analyst report suggests that this particular ETF invests in various alternate energy companies, which gives investors access to a wide range of clean energy stocks.
The fund currently tracks 31 holdings. The top three by weight are Microchip Technology (NASDAQ:MCHP) at a 9.96 percent weighting, Vestas Wind Systems at 9.65 percent and Ametek (NYSE:AME) at a 9.3 percent weighting.
5. ALPS Clean Energy (EDGX:ACES)
Market cap: US$32.36 million; current price: US$28.14
ALPS Clean Energy was formed recently, on June 29, 2018. The majority of the companies in this ETF are based in North America.
ALPS has 33 holdings, with Cree (NASDAQ:CREE), Pattern Energy (NASDAQ:PEGI,TSX:PEGI) and First Solar making up the top three holdings with weightings of 5.62 percent, 5.56 percent and 5.44 percent, respectively.
This is an updated version of an article originally published by the Investing News Network in 2018.
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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.