High energy prices have reignited positive clean energy sentiment, propelling ETFs offering exposure to the energy transition.
Investors looking to add exposure to the quickly growing industry should consider the SmartETFs Sustainable Energy II ETF (SOLR), which offers exposure to companies poised to benefit from the shift to sustainable energy.
This includes companies believed to provide or support alternative or renewable sources of energy, or those that produce, generate, transport, deliver, or extend energy applications in a way that makes alternative or renewable energy more efficient or accessible, according to SmartETFs.
There are several reasons why this industry is poised for accelerated growth and strong returns in the coming years.
Solar and wind power are two of the fastest-growing sources of clean power generation in both the United States and Canada, while hydro and geothermal energy continue to rapidly increase in global adoption.
Additionally, clean energy storage costs have plummeted both in size and cost to allow for smart cities, buildings, and residences that use internet-connected battery systems to more efficiently distribute and consume clean energy.
Demand for electric vehicles is also growing at a rapid pace, and global passenger EV sales are projected to increase sharply over the next two decades, rising from 3 million in 2020 to 66 million in 2040, representing over two-thirds of global passenger vehicle sales.
A recent “net zero 2050” report by McKinsey estimates that $9.2 trillion will need to be invested across various sectors annually to limit the global temperature rise to 1.5°C by 2050 — an estimated 60% increase on current investment levels.
SOLR has 30 holdings, spanning all market caps and several global markets, with the greatest exposure to NextEra Energy, Ameresco, TransAlta Renewables, China Longyuan Power Group Corporation, and Iberdrola.
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