With climate change becoming a pertinent issue, people all over the world are concerned about its effects. According to the World Health Organization, 9 out of 10 people worldwide breathe polluted air. Global sea level has risen by about 8 inches since 1880 and it is projected to rise further as a result of added water from rapid melting of ice on land and the expansion of seawater as it warms. Fortunately, many countries are taking action to prevent worsening conditions in the future.
Individuals and businesses alike are taking measures to transition towards a sustainable future. In fact, renewable energy could power the world by 2050. The Paris Agreement of 2015 was an important step towards this goal, bringing all nations into a common cause to undertake efforts to combat climate change. Even though the United States officially withdrew from the agreement on November 4th, President-elect Joe Biden has expressed his intent to re-join the Paris Agreement on his first day of office.
So, ‘green energy’ stocks are definitely expected to grow in the future. While it might be risky to bet on a single cleantech stock, ETFs with exposure in this space could be a less-risky option to gain from the impending changes. The Invesco WilderHill Clean Energy ETF (PBW), First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN), and KraneShares Electric Vehicles and Future Mobility Index ETF (KARS) should gain with the world striving toward a sustainable future with clean energy.
Invesco WilderHill Clean Energy ETF (PBW)
PBW primarily invests in companies that will substantially benefit from the world transitioning towards a sustainable future through cleaner energy and conservation. With Assets Under Management (AUM) of $1.1 billion, it’s a unique fund in the sense that it is heavy on tech stocks, spreading the rest of the exposure across other sectors. Its top holding is NIO Inc. (NIO) which makes up 4.29% of the fund, followed by SunPower Corporation (SPWR) with a 3.39% weighting and JinkoSolar Holding Company Limited (JKS), with a 3.37% weighting.
PBW’s expense ratio of 0.70% is a bit higher than the category average of 0.33%. It has returned 127.7% over the past six months, and 119% year-to-date. It pays an annual dividend of $0.19, which yields 0.26% on the prevailing price. ICLN’s four-year average dividend yield is 1.5%.
PBW has gained 225.5% since hitting its 52-week low of $22.20 in mid-March. The ETF is currently trading 5.4% below its 52-week high of $78.48.
How does PBW stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Overall POWR Rating
It is also ranked #2 out of 36 ETFs in the Energy Equities ETFs group.
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
QCLN invests in the alternative energy industry. The fund, which has a wide depth and breadth in its holdings, not only invests in sectors making advanced batteries for the Electrical Vehicles (EVs) market, but also in companies focused on solar energy and biofuels, among others. The fund has AUM of $997.9 million. Its top holdings include NIO at 13.77%, Enphase Energy, Inc. (ENPH) at 7%, and Tesla, Inc. (TSLA) at 5.43%.
QCLN has an expense ratio of…
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