3 Top Clean / Alternative Energy ETF's to buy!

We provide 3 top Clean/Alternative energy ETFs (ICLN, TAN, PBW ) to invest in for both active and passive investors that are focus on environmentally friendly investments."

Key Takeaways:

  1. What are ETF's?

  2. What is Clean / Alternative Energy ETF's?

  3. Top Clean / Alternative Energy ETF's.

By: Allan R Kirby

What Is an ETF?


An ETF is a security that contains a collection of investments, usually stocks and bonds. The investments could be a collection of stocks in the same industry or one that tracks an index such as the Dow Jones Industrial Average (DJIA), S&P 500 Index, or the Nasdaq Composite Index. Additionally ETF's are similar to mutual funds but can be bought and sold on the stock exchanges and provide expenses that are much lower than what a mutual fund would charge.


Some of the benefits of an ETF include:


1. ETF's are a great way to invest in a specific sector or index for both professionals and novice investors alike.

2. Eliminates single stock risks.

3. Allows you to be diversified.

4. Expense fees to run the ETF are very low.

5. It's easy to buy and sell ETF's.

6. Great investment for the more passive investor [1].


Clean / Alternative Energy ETFs


So what is Clean/Alternative Energy ETF's? They are investment funds that invest in clean sources of energy such as wind, solar, hydrogen, and water, some companies that you could find in Clean / Alternative Energy ETF's include:


Canadian Solar Inc

First Solar Inc

Vestas Wind Systems A/S

Plug Power Inc.


Clean / Alternative Energy ETFs are very popular today because more investors are looking to invest in companies that have a positive social and environmental impact. This is called ESG investing, which stands for Environmental, Social, and Governance where investors apply a set of socially responsible factors as part of their investment decisions.


Clean / Alternative Energy ETF's to buy


The following are the 3 top Clean / Alternative Energy ETF's that investors could add to their portfolio:


#1 iShares Global Clean Energy ETF (ICLN)


Expense Ratio: .45% (Good)


iShares Global Clean Energy ETF is designed to track the S&P Global Clean Energy Index. The fund invests at least 90% of its assets in the securities of the index and in investments that have economic characteristics that are substantially identical to the components securities and investments. The index is designed to track the performance of approximately 28 clean energy-related companies.


Top Holdings include:


SolarEdge Technologies, Inc.

Plug Power Inc.

Sunrun Inc.

Enphase Energy, Inc.

Xinyi Solar Holdings Ltd.

First Solar, Inc.

Vestas Wind Systems A/S.

Siemens Gamesa Renewable Energy, S.A.

Contact Energy Limited.

Boralex Inc. Class A.

#2 Invesco Solar ETF (TAN)


Expense Ratio: .71% (A little high)


Invesco Solar ETF is a little different because its holdings are concentrated in companies that are involved in the solar energy industry. This is not a broad-based clean energy/alternative ETF and has just a few holdings that make up the majority of the ETF. Additionally, this ETF tends to focus on smaller pure solar-related companies in the USA and China.


Top Holdings


SolarEdge Technologies, Inc.

Enphase Energy, Inc.

Xinyi Solar Holdings Ltd.

First Solar, Inc.

JinkoSolar Holding Co., Ltd. Sponsored ADR

Sunrun Inc.

Daqo New Energy Corp. Sponsored ADR.

Scatec Solar ASA.

Canadian Solar Inc.

Encavis AG.


#3 Invesco WilderHill Clean Energy ETF (PBW)

Expense Ratio: .70% (A little high)

The Invesco WilderHill Clean Energy ETF is much more diversified than the TAN ETF we just mentioned. They don't just invest in industry pure-plays like wind and solar, they also include companies based on their perceived relevance to the renewable energy space. What's unique about this ETF is that it follows a tiered, equal-weighting structure and caps any one stock to no more than 4%. This reduces concentration in any one particular area such as Solar and ensures a very diversified set of securities in the ETF.


Top Holdings


JinkoSolar Holding Co., Ltd. Sponsored ADR.

NIO Inc. Sponsored ADR Class A.

Lithium Americas Corp.

Daqo New Energy Corp. Sponsored ADR.

SunPower Corporation.

Livent Corporation.

Enphase Energy, Inc.

SolarEdge Technologies, Inc.

Kandi Technologies Group, Inc.

Sociedad Quimica Y Minera De Chile S.A. Sponsored ADR Pfd Class B.


" What are Alternative Energy ETF's? They are investment funds that invest in clean sources of energy such as wind, solar, water and even hydrogen."

Investing longterm in Clean / Alternative Energy ETF's


The demise of the oil industry over the last decade is hard to ignore. With the spring pandemic and subsequent lockdowns, oil demand has plummeted and has left the oil industry in disarray. In fact, at one point in 2020 U.S. oil prices turned negative for the first time in history. Many investors want to go green and no longer have an interest in the fossil fuel industry, so demand will continue to be high for clean and alternative energy ETFs.


We like these three funds and find they would be good additions to anyone's portfolio, especially for investors who are concerned about being socially responsible with their investing. Although these are not high flying cloud technology stocks, clean energy ETFs have been hugely successful over the last couple of years. TAN has actually been up significantly just over the last few months. Finally, we like these ETFs because of their size, all three have well over $1 or $2 Billion in value and are relatively liquid.


Like all investments, these investments may or may not be for you, however, take the time, do your research and see if these three clean/alternative ETF's are for you.

Notes:

  1. Passive Investors are investors who prefer to buy and hold stocks but are not actively involved with the securities they hold. Passive investors do take care of their overall investment strategies, however, they tend to hold their investments over a longer period of time. Most passive investors invest their money into ETF's and Mutual Funds as these types of investments do not require investors to be actively involved. But many passive investors can and do invest in single stocks as well.


Stocks to buy is a segment of the MySmallBank.com blog written by Allan R Kirby, who writes and produces investment and personal finance articles and videos.

Disclosure: mysmallbank.com nor the author received any compensation from the mentioned securities for this article. The article is our opinion only and is written to help readers learn more about the ETFs mentioned in this article. Consider this as basic information only and utilize professional services and additional sources before making an investment decision.


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