Now that President Barack Obama has taken office, many investors that were standing on the sidelines are eager to jump back into the market and gain exposure to alternative energy and the exchange traded funds (ETFs) that track the sector.

Choosing an ETF.  When choosing ETFs, the two factors to consider are expense ratios and whether to go domestic or global, states Tom Konrad of Seeking Alpha.  All things created equal, it is generally best to pick an ETF with a lower expense ratio because these tend to eat away from overall returns. Among other things, we also suggest investors be mindful of trading volume and total assets, as well.

Staying Home or Going Abroad. Choosing between going global or staying domestic is a bit more difficult.  One the one hand, Obama’s restructuring and spending programs advocate the use of alternative energy, making domestic funds attractive.  On the other hand, global companies are generally more established and most U.S. investors already have portfolios emphasized on U.S. stocks, so going global may be good for diversification.

At the end of the day, lower expense ratios are always a good bet and the decision to go global or stay at home is dependent on one’s appetite for risk and overall investment goals. 

Some of the many ETFs that target the “green” sector include:

• PowerShares WilderHill Clean Energy (PBW): down 9.8% for the last month

• Van Eck Global Alternative Energy Fund (GEX): down 3.6% for the last month

Tags: Alternative Energy, GEX, Green ETFs, Obama, PBW, Sector ETFs, Socially Responsible ETFs