Cleantech

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With interest in ETFs on the rise, now may be the time for environmentally minded investors to think about clean energy ETFs.

Exchange-traded funds (ETFs) have been gaining popularity in North America in a wide range of industries, including the clean energy sector, whose appeal is rapidly increasing.

ETF inflows have hit record levels in recent years, and 2021 was no different. As of November, annual global net inflows had already surpassed US$1 trillion for the first time; that's compared to US$735.7 billion for all of 2020.

The rising demand for these investment products spurred fund houses to launch more ETFs in 2021, and even to convert their existing mutual funds into ETFs. Reuters reported that, according to Refinitiv data, 709 ETFs had been launched in 2021 as of mid-July, compared with just 428 in the same period in 2020.


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. All numbers and figures were gathered using ETFdb.com and were current as of January 4, 2022. Read on to learn more.

1. iShares Global Clean Energy ETF

Total assets: US$5.61 billion

The iShares Global Clean Energy ETF (NASDAQ:ICLN) 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.

Three of the iShares Global Clean Energy ETF's top-weighted holdings include: Enphase Energy (NASDAQ:ENPH) with a 8.38 percent weighting, Consolidated Edison (NYSE:ED,LSE:0I35) at 6.76 percent and Vestas Wind Systems (CPH:VWS) at 6.63 percent.

2. First Trust NASDAQ Clean Edge Green Energy Index Fund

Total assets: US$2.83 billion

The First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN), 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. Three of its highest-weighted holdings are Tesla (NASDAQ:TSLA) at 9.17 percent, ON Semiconductor (NASDAQ:ON) at 8.17 percent and NIO (NYSE:NIO) at 7.49 percent.

3. Invesco WilderHill Clean Energy ETF

Total assets: US$1.56 billion

Begun on March 3, 2005, the Invesco WilderHill Clean Energy ETF (ARCA:PBW) focuses on clean energy companies using green and renewable energy and technologies that help with cleaner energy.

Currently this ETF's top-weighted holdings include REE Automotive Holdings (NASDAQ:REE) at 1.77 percent, Sunlight Financial Holdings (NYSE:SUNL) at 1.65 percent and Tesla at 1.5 percent.

4. ALPS Clean Energy ETF

Total assets: US$874.83 million

The ALPS Clean Energy ETF (ARCA:ACES) was formed fairly 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, Brookfield Renewable Partners (TSX:BEP.UN,NYSE:BEP) and Northland Power (TSX:NPI,OTC Pink:NPIFF), with weightings of 6.1 percent, 5.41 percent and 5.29 percent, respectively.

5. SPDR S&P Kensho Clean Power ETF

Total assets: US$352.44 million

The SPDR S&P Kensho Clean Power ETF (ARCA:CNRG) was launched in October 2018 and tracks companies whose products and services are driving innovation behind the clean energy sector, including the areas of solar, wind, geothermal and hydroelectric power.

The fund currently has 46 holdings. The top three by weight are ALLETE (NYSE:ALE) at 3.07 percent, Consolidated Edison at 3.04 percent and NextEra Energy (NYSE:NEE,LSE:0K80) at 3 percent.

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.

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