Alternative-energy stocks and exchange traded funds (ETFs) have been one of the beneficiaries of the rising cost of energy as consumers clamor to find some relief.

But Eleanor Laise for the Wall Street Journal warns that these funds come with some volatility, and that just because oil and gas prices are high, it doesn’t always equal better performance in the wind and solar sectors.

Regardless, these funds have been cropping up with more and more frequency. The first solar-energy ETF, the Claymore/MAC Global Solar Energy Index (TAN), launched in April. It was quickly followed by the Market Vectors Solar Energy (KWT). TAN is up 12.4% since its launch, while KWT is up 5.7%.

They’re just the latest of several available alternative-energy ETFs, and investors are diving into the sector head-first. But some of these funds are down sharply so far this year. There’s  potential in this sector as global warming concerns intensify, but to protect yourself, don’t make it the centerpiece of your portfolio, and stick to the funds that are above their trend lines for the most safety.

Some of the other alternative and green ETFs are:

  • Market Vectors Environmental Services (EVX), up 4.1% year-to-date
  • First Trust NASDAQ Clean Edge (QCLN), down 18.6% year-to-date
  • PowerShares WilderHill Clean Energy (PBW), down 19.9% year-to-date

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.