Have you ever considered an exchange traded fund (ETF) that mimics the color of money? Solar, biofuels, energy efficiency, wind and water are only a few shades the stocks come in, so why not an ETF that covers clean-tech or green? These ETFs offer a low-cost, diversified option of a basket of stocks that track a certain index. Kenneth Stier for CNBC reports that after 2006, around a dozen of these types of funds came on the market. Don’t be fooled, green comes in many shades as every ETF has different components.
PowerShares Wilderhill Clean Energy (PBW) is the first of the funds, coming to market in March 2005. It is the largest with $1.3 billion under management, and is up 15.71% since its launch. The 42 stocks are mostly small-caps, and include companies like Suntech Power and Evergreen Solar. Van Ecks’ Market Vectors Global Alternative Energy ETF (GEX) tracks a benchmark including 30 alternative energy companies. Large-cap firms make up around 30%, with another 30% in non-U.S. companies. Since May 2007, its inception, the share price has risen 36%.
Although investors may feel enlightened investing in the future of their planet, there is risk to be endured because of the narrow focus of these ETFs. If you are seeing green, take the time to research what makes up a particular green ETF. Here are some other "green" ETFs to consider:
- PowerShares Cleantech (PZD)
- Market Vectors Environmental Services ETF (EVX)
- Claymore/LGA Green ETF (GRN)
- PowerShares WilderHill Progressive Energy (PUW)
- PowerShares Global Clean Energy (PBD)
- First Trust NASDAQ Clean Edge U.S. Liquid ETF (QCLN)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.