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4 Funds to Make the Most of the Clean Energy Trend
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Clean and green energy investment is one of the hottest trends in the United States at present. In fact, last year, a record amount of renewable energy capacity was built on a huge investment by America and China, per the International Renewable Energy Agency (IREA). Wind and solar power accounted for 82% of the new power installations in 2020. Per the IREA report, renewable capacity grew 10.3% last year.
As the climate clock continues to tick, economies globally are gearing up to make impactful changes in their efforts toward reducing carbon footprint. And policy changes and technological advancements continue to be the main drivers of this change, boosting the clean energy space. President Joe Biden has so far played a crucial role in aggressively pushing the United States to meet sustainability goals. One such change was rejoining the Paris climate agreement signed in 2016.
On Apr 7, the U.S. Treasury Secretary Janet Yellen released details of a tax hike proposal that would replace subsidies for fossil fuel companies with incentives for production of clean energy. Biden’s $2-trillion infrastructure plan is an effort to achieve America’s long-term energy independence and the fight against climate change. This plan will provide a 10-year extension of the production tax credit and investment tax credit for clean energy generation, and includes wind and solar power, and energy storage costs. Along with that, it will restore a tax on polluters, especially Superfund toxic waste sites caused by fossil fuel production.
While the bill plays a huge role in supporting Biden’s plan to make the United States run 100% carbon free by 2035, it also supports the electric-vehicle (EV) market. The EV market will benefit from installation of 500,000 EV chargers by 2030, which can in turn electrify 20% of the nation’s yellow school buses and replace 50,000 diesel transit vehicles. Similarly, the transition into smart homes will boom as the plan aims to make cities more climate-resilient by retrofitting 2 million homes and commercial buildings.
4 Clean Energy Fund Picks
Given the current scenario and the boom in clean energy technology, we have shortlisted four funds that are poised to grow. These funds have a significant exposure to clean energy generating companies or EV makers and flaunt a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Calvert Global Energy Solutions Fund Class A (CGAEX - Free Report) aims to track the performance of the Calvert Global Energy Research Index. The fund invests majority of assets in companies whose main business is sustainable energy solutions. The portfolio consists of companies engaged in facilitating the transition to a more sustainable economy through the reduction of greenhouse gas emissions and the expanded use of renewable energy sources.
This Zacks Sector – Other product has a history of positive total returns for more than 10 years. CGAEX has three and five-year return of 19.9% and 15.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
CGAEX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.24%, which is below the category average of 1.29%. Additionally, CGAEX has significant investment in alternative energy companies like Nextera Energy Partners, First Solar and Terraform Power.
Fidelity Select Environment and Alternative Energy Portfolio (FSLEX - Free Report) aims for capital appreciation. The non-diversified fund invests majority of assets in common stocks of companies principally engaged in business activities related to alternative and renewable energy, energy efficiency, pollution control, water infrastructure, waste and recycling technologies, or other environmental support services.
This Zacks Sector – Other product has a history of positive total returns for more than 10 years. FSLEX has three and five-year return of 10.9% and 16.4%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSLEX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.85% versus the category average of 1.04%. Additionally, the fund has significant investment in alternative energy companies like Tesla, Cummins and Linde.
New Alternatives Fund Class A (NALFX - Free Report) aims for long-term capital appreciation, with income being the secondary objective. The fund invests in common stocks of YieldCos, American Depository Receipts, real estate investment trusts and publicly-traded master limited partnerships.
This Zacks Sector – Other product has a history of positive total returns for more than 10 years. NALFX has three and five-year return of 29.2% and 22.7%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NALFX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.08% versus the category average of 1.29%. Additionally, the fund has significant investment in alternative energy companies like Nextera Energy, Vestas Wind Systems and Innergex Renewable Energy.
Fidelity Select Automotive Portfolio (FSAVX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies involved in the manufacture, marketing or sale of automobiles, trucks, specialty vehicles, parts, tires and related services.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, FSAVX has returned 21.9% and 16.1% over the past three and five years, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FSAVX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 1.00%, which is below the category average of 1.22%. Additionally, the fund has significant investment in companies that deal in EVs or related products and services like Tesla, Ford and Nio.
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4 Funds to Make the Most of the Clean Energy Trend
Clean and green energy investment is one of the hottest trends in the United States at present. In fact, last year, a record amount of renewable energy capacity was built on a huge investment by America and China, per the International Renewable Energy Agency (IREA). Wind and solar power accounted for 82% of the new power installations in 2020. Per the IREA report, renewable capacity grew 10.3% last year.
As the climate clock continues to tick, economies globally are gearing up to make impactful changes in their efforts toward reducing carbon footprint. And policy changes and technological advancements continue to be the main drivers of this change, boosting the clean energy space. President Joe Biden has so far played a crucial role in aggressively pushing the United States to meet sustainability goals. One such change was rejoining the Paris climate agreement signed in 2016.
On Apr 7, the U.S. Treasury Secretary Janet Yellen released details of a tax hike proposal that would replace subsidies for fossil fuel companies with incentives for production of clean energy. Biden’s $2-trillion infrastructure plan is an effort to achieve America’s long-term energy independence and the fight against climate change. This plan will provide a 10-year extension of the production tax credit and investment tax credit for clean energy generation, and includes wind and solar power, and energy storage costs. Along with that, it will restore a tax on polluters, especially Superfund toxic waste sites caused by fossil fuel production.
While the bill plays a huge role in supporting Biden’s plan to make the United States run 100% carbon free by 2035, it also supports the electric-vehicle (EV) market. The EV market will benefit from installation of 500,000 EV chargers by 2030, which can in turn electrify 20% of the nation’s yellow school buses and replace 50,000 diesel transit vehicles. Similarly, the transition into smart homes will boom as the plan aims to make cities more climate-resilient by retrofitting 2 million homes and commercial buildings.
4 Clean Energy Fund Picks
Given the current scenario and the boom in clean energy technology, we have shortlisted four funds that are poised to grow. These funds have a significant exposure to clean energy generating companies or EV makers and flaunt a Zacks Mutual Fund Rank #1 (Strong Buy). Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Calvert Global Energy Solutions Fund Class A (CGAEX - Free Report) aims to track the performance of the Calvert Global Energy Research Index. The fund invests majority of assets in companies whose main business is sustainable energy solutions. The portfolio consists of companies engaged in facilitating the transition to a more sustainable economy through the reduction of greenhouse gas emissions and the expanded use of renewable energy sources.
This Zacks Sector – Other product has a history of positive total returns for more than 10 years. CGAEX has three and five-year return of 19.9% and 15.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
CGAEX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.24%, which is below the category average of 1.29%. Additionally, CGAEX has significant investment in alternative energy companies like Nextera Energy Partners, First Solar and Terraform Power.
Fidelity Select Environment and Alternative Energy Portfolio (FSLEX - Free Report) aims for capital appreciation. The non-diversified fund invests majority of assets in common stocks of companies principally engaged in business activities related to alternative and renewable energy, energy efficiency, pollution control, water infrastructure, waste and recycling technologies, or other environmental support services.
This Zacks Sector – Other product has a history of positive total returns for more than 10 years. FSLEX has three and five-year return of 10.9% and 16.4%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
FSLEX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.85% versus the category average of 1.04%. Additionally, the fund has significant investment in alternative energy companies like Tesla, Cummins and Linde.
New Alternatives Fund Class A (NALFX - Free Report) aims for long-term capital appreciation, with income being the secondary objective. The fund invests in common stocks of YieldCos, American Depository Receipts, real estate investment trusts and publicly-traded master limited partnerships.
This Zacks Sector – Other product has a history of positive total returns for more than 10 years. NALFX has three and five-year return of 29.2% and 22.7%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.
NALFX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 1.08% versus the category average of 1.29%. Additionally, the fund has significant investment in alternative energy companies like Nextera Energy, Vestas Wind Systems and Innergex Renewable Energy.
Fidelity Select Automotive Portfolio (FSAVX - Free Report) fund aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies involved in the manufacture, marketing or sale of automobiles, trucks, specialty vehicles, parts, tires and related services.
This Sector - Other product has a history of positive total returns for over 10 years. Specifically, FSAVX has returned 21.9% and 16.1% over the past three and five years, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.
FSAVX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 1.00%, which is below the category average of 1.22%. Additionally, the fund has significant investment in companies that deal in EVs or related products and services like Tesla, Ford and Nio.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>