Investors who fervently believe that green technology will be a prominent part of the future may find that looking into green investments and related exchange traded funds (ETFs) is a good idea.
In a poor economy, consumers are cutting back, landfill volumes have dropped, sales of appliances like air conditioners have fallen, and Americans are turning to public transportation and recycling goods, reports Rebekah Kebede for Reuters. Frugality has resulted in a reduction in pollution, it has also diminished investment in green technology.
Some investors, such as T. Boone Pickens who scaled back on his wind farm project, are pulling back from financing major clean energy ventures. In the United States, wind-power development is expected to drop for the first time since 2004.
When green gathers steam, there are some points to keep in mind. Don’t be suckered into investing in companies claiming to be green since it is easy to proclaim their “greenness,” especially if they don’t trade on a regulated stock exchange, remarks Matt Krantz for USA Today.
- iShares S&P Global Clean Energy Index (ICLN): up 10.7% year-to-date
- First Trust NASDAQ Clean Edge Green Engy (QCLN): up 32.4% year-to-date
- PowerShares Cleantech (PZD): up 22.5% year-to-date
- PowerShares WilderHill Clean Energy (PBW): up 24% year-to-date
However, be aware of the risks involved in investing in this sector. Investing in green energy does not directly help the environment. Krantz also warns that you can potentially lose money by investing in green companies, because it is more along the lines of speculation since there isn’t enough in-depth academic analysis of the value of green investments.
For more information on green investments, visit our green category.
Max Chen contributed to this article.