Exchange-Traded Funds (ETFs) are gaining popularity in North America in a wide range of sectors, including clean energy, whose interest is rapidly growing.
For investors who want to gain exposure to the clean technology market, investing in individual stocks can be intimidating considering the wide spectrum of this market sector, which includes renewable energy technologies such as wind and solar; battery technologies for electric vehicles and large scale energy storage systems; agritech, water treatment and air purification systems; built environment technologies; carbon and green hydrogen capture.
These are just a few of the trends that will influence the clean technology sector in 2024 and beyond
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ETFs have become so popular in part because they provide a safer way for investors to gain exposure to various sectors while avoiding the volatility that comes with investing in individual stocks.
Below is an overview of the five best clean energy ETFs to consider, ranked by total assets. All numbers and figures were collected using ETFDB.com and are current as of February 29, 2024
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Table of Contents:
1. iShares Global Clean Energy ETF (NASDAQ:ICLN)
Total assets: $2,477 billion
The iShares Global Clean Energy ETF was created on 24 June 2008 and has a large portfolio of national and international equities.
An analytical report on the ETF states that it probably “doesn’t deserve” a big weight in an investor’s long-term portfolio. He suggests that the fund could be useful as a ‘satellite position’ that examines a fraction of the market often overlooked by less focused ETFs
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Three of the main weighted positions of the iShares Global Clean Energy ETF include: Enphase Energy at 8.81 percent, First Solar with a weight of 7.64 percent, and Nextracker at 4.93 percent.
2. First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN)
Total Assets: US$837.32 billion
The First Trust NASDAQ Clean Edge Green Energy Index Fund, officially in existence since 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 sub-sectors, such as biofuels,
solar energy and advanced batteries.
ETFDB.com also states that, due to the focus of this ETF, it could be attractive to investors seeking greater exposure in the alternative energy sector. Three of its heaviest positions are ON Semiconductor at 8.83 percent, First Solar at 7.75 percent and Tesla at 6.93
percent.
3. Invesco WilderHill Clean Energy ETF
(ARCA: PBW)
Total Assets: US$366.32 million
Launched on March 3, 2005, the Invesco WilderHill Clean Energy ETF focuses on clean energy companies that use renewable energy and technologies that help with cleaner energy.
Currently, the positions with the highest weight of this ETF include Nextracker at 2.37 percent, Solid Power at 2.12 percent, and American Superconductor at 2.08 percent.
4. ALPS Clean Energy ETF (BRAND: ACES)
Total Assets: US$230.22 million
The ALPS Clean Energy ETF was formed relatively recently, on 29 June 2018. Most of the companies in this ETF are based in North America. The top three positions in the ETF are Enphase Energy with a weight of 6.13 percent, Itron at 5.90 percent and Albemarle at 5.75 percent
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5. SPDR S&P Kensho Clean Power
ETF (BRAND: CNRG)
Total Assets: US$213.84 million
The SPDR S&P Kensho Clean Power ETF was launched in October 2018 and follows companies whose products and services are driving innovation in the clean energy sector, including the areas of solar, wind, geothermal and hydropower.
The fund currently has 51 positions. The top three by weight are Nextracker at 3.71 percent, Constellation Energy at 3.37 percent and General Electric at 3.13 percent
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