Although oil prices have fallen back from their record highs, the shock was enough to make many investors consider the advantages of alternative energy exchange traded funds (ETFs).

As a result, many new alternative energy stocks and funds have surfaced. Areas such as wind, solar, bio-fuel, geothermal and bio-mass energy have become household words, reports MoneyWeek. But with so many new companies springing onto the scene, it’s hard to know which ones to pick.

ETFs targeted to this sector simplify things. Since these stocks are relatively new or are focused on smaller companies, the ETF allows broader, less volatile exposure, cutting down the risks.

Unfortunately, recent market volatility has not helped these funds take root, so to speak, and they’ve been hit just as hard as other sectors this year. Once the market has re-gained its health, these funds may cater to better our lives in terms of both affordable sources of energy and giving us a cleaner world in which we can live.

Oil prices are continuing to head south, despite an emergency meeting called by the Organization of Petroleum Exporting Countries (OPEC), AFP reports. Analysts say the organization may cut output to defend oil revenues. Oil today is at $87.24 a barrel.

  • PowerShares WilderHill Clean Energy (PBW): down 67.6% year-to-date (black line)
  • Market Vectors Global Alternative Energy (GEX): down 60.2% year-to-date (green line)

Alternative Energy Exchange Traded Funds (ETFs)

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.