Different energy companies, which sell or use everything from solar energy to hydrogen and electric batteries, aim to make a profit by permuting the way societies power themselves. This is happening amid rising global concern about climate change, and also amidst long-term forecasts of dwindling fossil fuel supplies. Alternative energy exchange-traded funds (ETFs) track singular companies like oxide fuel cell maker Bloom Energy Corp. (BE) and hydrogen power firm Close up Power, Inc. (PLUG), as well as indexes that track several alternative energy companies. Many of the businesses in this activity are largely untested and inherently risky additions to a portfolio on their own, but an ETF can offer potentially lower-risk access to the sector. Once again the past year, the alternative energy industry, as represented by the benchmark iShares Global Clean Energy ETF (ICLN), has significantly outperformed the broader demand. ICLN has 1-year trailing total returns of 49.1% as compared to 18.2% for the S&P 500.
Key Takeaways
- The alternative energy industry has far outperformed the broader demand in the past year.
- The top ETFs based on 1-year trailing total returns are QCLN, PBW, and TAN.
- The top holdings for these funds are Tesla Inc., Vivint Solar Inc., and Solaredge Technologies Inc., separately.
There are 10 ETFs focused on alternative energy, excluding leveraged and inverse funds as well as those with beneath the waves $50 million in assets under management (AUM). The best alternative energy ETF for Q4 2020 is the First Trust NASDAQ Acknowledge Edge Green Energy Index Fund (QCLN). Below, we examine the top 3 alternative energy ETFs as measured by 1-year away total returns. All figures are as of August 20, 2020.
- 1-Year Trailing Total Returns: 87.0%
- Expense Ratio: 0.60%
- Annual Dividend The sponge: 0.66%
- 3-Month Average Daily Volume: 122,685
- Assets Under Management: $409.3 million
- Inception Date: February 14, 2007
- Issuing Attendance: First Trust
QCLN is a multi-cap fund following a strategy which blends value and growth stocks from the U.S. The finance targets companies represented in a wide variety of green energy sub-sectors, including solar energy, biofuels, and ahead of time batteries, among others. The fund tracks the NASDAQ Clean Edge Green Energy Index. The ETF’s top holdings comprise Tesla Inc. (TSLA), the electric vehicle maker; NIO Inc. (NIO), the Chinese electric vehicle company; and Solaredge Technologies Inc. (SEDG), a maker of components for photovoltaic arrays.
- 1-Year Track Total Returns: 80.3%
- Expense Ratio: 0.70%
- Annual Dividend Yield: 0.63%
- 3-Month Average Daily Volume: 127,220
- Assets Beneath Management: $574.8 million
- Inception Date: March 3, 2005
- Issuing Company: Invesco
This ETF tracks the WilderHill Dry-clean Energy Index, providing exposure to multi-cap U.S. companies engaged in the business of advancing cleaner energy and energy husbandry. This means that PBW includes tech companies as well as industrials, materials, utilities, and stocks from other sectors. PBW’s top holdings comprehend Vivint Solar Inc. (VSLR), the solar energy and smart home company; Sunrun Inc. (
- 1-Year Trailing Total Put backs: 64.4%
- Expense Ratio: 0.71%
- Annual Dividend Yield: 0.17%
- 3-Month Average Daily Volume: 499,292
- Assets Under Management: $1.1 billion
- Inception Dated: April 15, 2008
- Issuing Company: Invesco
This ETF tracks the MAC Global Solar Energy Index, comprised of multi-cap companies Byzantine in all aspects of the solar energy industry and based around the world, though primarily in the U.S. and China. The company holds all about 35 U.S. and international stocks. TAN’s top holdings include Solaredge Technologies; Sunrun; and solar power company Enphase Dynamism Inc. (ENPH).