Of course, long-term investors in solar ETFs should be prepared for volatility, and the industry is heavily dependent on government subsidies.

“Given its extremely narrow focus, this thematic fund should be treated as a satellite specialty holding to complement a diversified portfolio, albeit one that may be held for several consecutive years,” Morningstar’s Abraham Bailin writes in an analyst report on Guggenheim Solar ETF.

“Motivations for investors holding this fund include beliefs that carbon dioxide emissions must be curbed in concert with future electricity supply expansion, that developed nations will utilize solar in the pursuit of energy independence because of its decreasing manufacturing costs, and that government subsidies will remain large and persist long enough for solar technologies to become cost-competitive with traditional grid power,” he added.

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