Leading Clean Tech ETFs in 2023:
Climate change is an urgent global problem. Due to rising concerns, many consumers have joined the trend of sustainability and clean energy initiatives. According to the International Energy Agency (IEA), clean energy investment must have tripled by the end of the next decade to combat climate change and stabilize the energy market.
Indeed, government and corporate entities must increase their investment efforts to boost the green energy sector in the following years. However, like most ventures, investors risk losing money by investing in an underperforming company. A Clean energy exchange-traded fund (ETF) helps to mitigate the financial risks through this clean energy transition.
In this article, we’ll cover the leading clean tech ETFs that can help diversify your industry portfolio. You’ll also discover ways to access the best clean energy companies without selecting your stock. Let’s dive right in!
Five Main Clean Tech ETFs You Can Buy Into
iShares Global Clean Energy ETF (ICLN)
This is one of the most significant clean energy funds, having about $6 billion in assets under management. It mainly invests in businesses that offer renewable power sources such as wind and solar energy. By the end of 2022, the iShares Global Clean Energy ETF had about 100 stock holdings in major clean energy companies, including Enphase Energy, Vestas Wind Systems, and SolarEdge Technologies.
The fund offers an affordable expense ratio of 0.40%. It boasts an AA rating from MSCI, ranking it among the top 76 ETFs.
Invesco Solar ETF
The Invesco Solar ETF, also known as TAN, is one of the largest alternative energy funds, with about $3 billion in assets under management. It exposes investors to major companies that specialise in alternative and solar energy. TAN charges a total expense ratio of 0.66 and has top rankings on MSCI and ESG. Overall, the fund’s top three holdings include Enphase Energy (10.9%), First Solar (9.3%), and SolarEdge Technologies (7.4%).
ALPS Clean Energy ETF
ALPS clean energy ETF focuses mainly on US and Canadian companies involved in renewable and solar energy. The fund has a moderate expense ratio of 0.55% and offers broad allocation across diverse sectors. Some of these industry allocations include utilities (29%), industrials (28%), and consumer directionary (17%). In addition, it covers electric vehicles and other energy management solutions such as fuel cells.
ALPS investors also appreciate the fund’s environmental and ethical values with its AA rating on MSCI. It’s among the ETFs ranking at the 63rd percentile on ESG.
First Trust Global Wind Energy ETF
First Trust Global Wing Energy is among the best clean tech ETFs for investors interested in the wind energy sector. It offers a broad geographic diversification of different companies established in the industry. The fund also has a low-cost exposure ratio of 0.60% and 79th percentile ranking on ESG factors.
Investor WilderHill Clean Energy ETF (PWB)
PBW offers one of the best investment approaches in the clean energy sector. The fund has nearly 80 stock holdings and about $900 million in assets. PBW ensures an equal sector allocation across all its holdings compared to other ETFs. This exposes investors to a large stock of companies in the industry and doesn’t just focus on the top-known companies.