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Alternative Energy ETFs Sizzling With Opportunities: Here's Why
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A gamut of factors brings investors’ attention to the alternative energy space. Rallying oil prices, President Joe Biden’s endeavors and pledge to control emissions in half by 2030 along with growing awareness and concerns regarding climate change are some of the key catalysts attracting investors. In fact, some prominent players in the space like Enphase Energy (ENPH - Free Report) and Chesapeake Energy (CHK - Free Report) are already up 18.3% and 37.9%, respectively, so far in 2022.
Let’s take a look at the factors supporting the space in detail:
Rallying Oil Prices
Oil prices have been rallying since the beginning of this year. However, the Russia-Ukraine saga has added more fuel to the rally. WTI crude surged more than 4% on Apr 4, climbing above $100 a barrel, while Brent crude witnessed an approximate 3% increase. This Russia-Ukraine crisis-induced rally is here to stay longer as German Chancellor Olaf Scholz has commented that Western nations are contemplating imposing additional sanctions on Russia very soon. Russia’s atrocities on Ukrainians, labeled as “war crimes,” are already being highly condemned by global leaders.
Biden’s Plans
There’s no denying that U.S. President Joe Biden is seriously considering threats hidden behind climate change and is working toward his pledge to cutemissions in half by 2030. In the recently-released 2023 budget proposal, President Biden has raised around 60% in climate funding over the 2021 fiscal year. He has proposed to allocate about $45 billion in new funding for climate change, clean energy and environmental justice programs, per a CNBC article.
Meanwhile, the Biden administration had attempted to enhance the federal clean energy investment with the $1.75 trillion House-passed bill known as Build Back Better Act, which is stuck in Congress.
Growing Awareness About Climate Change
There is rising awareness regarding climate change concerns as the latest reports from government officials highlight the scope of the issue. Going by the United Nations’ climate science panel’s report, greenhouse gas emissions will be mandatorily required to peak before 2025 for lowering global warming to 1.5 degrees Celsius above preindustrial levels, per a CNBC article.
Furthermore, favorable government policies, impressive renewable investments, falling overall cost of generating renewable electricity and the growing adoption of electric vehicles (EVs) might keep supporting the momentum in the space in 2022.
Moreover, technological advancements, increasing investments, growing government initiatives and rising awareness across the globe about adopting clean energy have been leading to a rise in demand for renewable energy.
Clean Energy ETFs That Can be Great Bets
According to the International Energy Agency (IEA) report, renewable energy sources are expected to make up 95% of the world’s increase in power capacity through 2026. Per Allied Market Research, the global renewable energy market is expected to reach a value of $1.51 billion, at a CAGR of 6.1% between 2018 and 2025. Against this backdrop, let’s take a look at some alternative energy ETFs:
iShares Global Clean Energy ETF seeks to track the investment results of an index composed of global equities in the clean energy sector. It has 76 holdings. The fund’s AUM is $5.76 billion and the expense ratio is 0.42% (read: 5 Top-Ranked ETFs to Weather the Market Storms).
Invesco Solar ETF is based on the MAC Global Solar Energy Index, which comprises companies in the solar energy industry. It has 52 holdings. The fund’s AUM is $2.70 billion and the expense ratio is 0.66% (read: Play "Greenflation" With These Electric Vehicle ETFs).
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report)
First Trust NASDAQ Clean Edge Green Energy Index Fund seeks investment results that generally correspond to the price and yield, before fees and expenses, of the NASDAQ Clean Edge Green Energy Index. It has 65 holdings. The fund’s AUM is $2.44 billion while the expense ratio is 0.60%.
ALPS Clean Energy ETF seeks investment results that correspond (before fees and expenses) generally to the performance of its underlying index, the CIBC Atlas Clean Energy Index. The fund’s AUM is $829.4 million and the expense ratio, 0.55% (read: 5 Best Sector ETFs of March).
Invesco Global Clean Energy ETF is based on the WilderHill New Energy Global Innovation Index. It consists of 139 holdings. The fund’s AUM is $289 million and its expense ratio, 0.75%.
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Alternative Energy ETFs Sizzling With Opportunities: Here's Why
A gamut of factors brings investors’ attention to the alternative energy space. Rallying oil prices, President Joe Biden’s endeavors and pledge to control emissions in half by 2030 along with growing awareness and concerns regarding climate change are some of the key catalysts attracting investors. In fact, some prominent players in the space like Enphase Energy (ENPH - Free Report) and Chesapeake Energy (CHK - Free Report) are already up 18.3% and 37.9%, respectively, so far in 2022.
Let’s take a look at the factors supporting the space in detail:
Rallying Oil Prices
Oil prices have been rallying since the beginning of this year. However, the Russia-Ukraine saga has added more fuel to the rally. WTI crude surged more than 4% on Apr 4, climbing above $100 a barrel, while Brent crude witnessed an approximate 3% increase. This Russia-Ukraine crisis-induced rally is here to stay longer as German Chancellor Olaf Scholz has commented that Western nations are contemplating imposing additional sanctions on Russia very soon. Russia’s atrocities on Ukrainians, labeled as “war crimes,” are already being highly condemned by global leaders.
Biden’s Plans
There’s no denying that U.S. President Joe Biden is seriously considering threats hidden behind climate change and is working toward his pledge to cutemissions in half by 2030. In the recently-released 2023 budget proposal, President Biden has raised around 60% in climate funding over the 2021 fiscal year. He has proposed to allocate about $45 billion in new funding for climate change, clean energy and environmental justice programs, per a CNBC article.
Meanwhile, the Biden administration had attempted to enhance the federal clean energy investment with the $1.75 trillion House-passed bill known as Build Back Better Act, which is stuck in Congress.
Growing Awareness About Climate Change
There is rising awareness regarding climate change concerns as the latest reports from government officials highlight the scope of the issue. Going by the United Nations’ climate science panel’s report, greenhouse gas emissions will be mandatorily required to peak before 2025 for lowering global warming to 1.5 degrees Celsius above preindustrial levels, per a CNBC article.
Furthermore, favorable government policies, impressive renewable investments, falling overall cost of generating renewable electricity and the growing adoption of electric vehicles (EVs) might keep supporting the momentum in the space in 2022.
Moreover, technological advancements, increasing investments, growing government initiatives and rising awareness across the globe about adopting clean energy have been leading to a rise in demand for renewable energy.
Clean Energy ETFs That Can be Great Bets
According to the International Energy Agency (IEA) report, renewable energy sources are expected to make up 95% of the world’s increase in power capacity through 2026. Per Allied Market Research, the global renewable energy market is expected to reach a value of $1.51 billion, at a CAGR of 6.1% between 2018 and 2025. Against this backdrop, let’s take a look at some alternative energy ETFs:
iShares Global Clean Energy ETF (ICLN - Free Report)
iShares Global Clean Energy ETF seeks to track the investment results of an index composed of global equities in the clean energy sector. It has 76 holdings. The fund’s AUM is $5.76 billion and the expense ratio is 0.42% (read: 5 Top-Ranked ETFs to Weather the Market Storms).
Invesco Solar ETF ((TAN - Free Report) )
Invesco Solar ETF is based on the MAC Global Solar Energy Index, which comprises companies in the solar energy industry. It has 52 holdings. The fund’s AUM is $2.70 billion and the expense ratio is 0.66% (read: Play "Greenflation" With These Electric Vehicle ETFs).
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report)
First Trust NASDAQ Clean Edge Green Energy Index Fund seeks investment results that generally correspond to the price and yield, before fees and expenses, of the NASDAQ Clean Edge Green Energy Index. It has 65 holdings. The fund’s AUM is $2.44 billion while the expense ratio is 0.60%.
ALPS Clean Energy ETF (ACES - Free Report) )
ALPS Clean Energy ETF seeks investment results that correspond (before fees and expenses) generally to the performance of its underlying index, the CIBC Atlas Clean Energy Index. The fund’s AUM is $829.4 million and the expense ratio, 0.55% (read: 5 Best Sector ETFs of March).
Invesco Global Clean Energy ETF (PBD - Free Report)
Invesco Global Clean Energy ETF is based on the WilderHill New Energy Global Innovation Index. It consists of 139 holdings. The fund’s AUM is $289 million and its expense ratio, 0.75%.