Investors will have to be wary of utility companies that have been slow to adapt in the changing energy sector.
“There’s something inevitable about renewables,” Coster added. “They’re going to be huge, and they are challenging the traditional business models, and those models have to change in advance.”
Solar ETFs have generated impressive growth, but that have experienced a small setback after the recent sell-off in growth stocks. The Guggenheim Solar ETF (NYSEArca: TAN) and Market Vectors Solar Energy ETF (NYSEArca: KWT) have both surged over 60% over the past year. [FSLR, Solar ETFs Dim As Investors Ditch Momentum Stocks]
Utility ETFs that provide exposure to stable dividend payers have strengthened this year after increased demand from the unusually frigid winter and the dip in interest rates. The Utilities Select Sector SPDR (NYSEArca: XLU) and iShares U.S. Utilities ETF (NYSEArca: IDU) are both up around 13% year-to-date. [The Suspicious Decline of Utilities ETFs]
For more information on the energy sector, visit our energy category.
Max Chen contributed to this article.