The solar industry was one of the most beaten down sectors of 2012 with the Guggenheim Solar ETF (TAN) falling more than 50% last year.
Companies that manufacture and install solar panels were consistently falling prey to short sellers and institutional investors were rushing for the exits as prices fell. The constant stream of negative news only added to the selling frenzy as solar stocks plummeted to an extreme last November.
But as the saying goes, what a difference a year makes.
According to data compiled by etfdb.com, TAN is the top performing non-leveraged exchange-traded fund in 2013 with gains of over 97%. This stunning turnaround is largely based on rising demand for solar installations combined with falling prices for solar modules. Consumers are starting to realize the long-term value in having these clean energy systems attached to their homes. As systems become more advanced and the efficiency ramps up, we will likely see even greater demand from buyers looking to lower their utility costs.
TAN consists of 29 individual companies engaged in numerous segments of the solar energy industry. The top three holdings include First Solar Inc (FSLR), Hanergy Solar Group, and GT Advanced Technologies Inc (GTAT). The concentrated nature of this industry group makes the fund relatively non-diversified when compared to broader small-cap funds. TAN also benefits from a global slant with the top three geographic weightings in the United States, China, and Hong Kong representing over 80% of the fund’s assets.