PowerShares WilderHill Clean Energy (PBW) was a top performing exchange traded fund earlier this year, but over the last three months it has fallen behind other energy ETFs, such as Energy Select Sector (XLE).  PBW is down 22% over the last three months, where XLE is up 1%.

Jonathan Bernstein of ETF Zone offers some reasons why the alternative energy ETF is no longer trading in line with traditional energy ETFs.

  1. XLE holds some of the largest companies in the industry, while PBW holds some of the smallest.
  2. The companies in XLE are some of the most profitable in the world, look at ExxonMobile’s (XOM) $10 billion earnings for second quarter.  The companies in PBW have little revenue.
  3. Companies in PBW are mostly experimental technology-focused.  There are risks involved with these companies as they are not established like some of the traditional energy companies.


For full disclosure, XLE is held in some of our client accounts.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.