The face of energy is shifting from fossil fuels to more renewable resources, whether electricity, wind, solar, or more. This is huge for ETFs like the iShares Global Clean Energy ETF (ICLN), which is up 45% the past six months.
The fund seeks to track the S&P Global Clean Energy Index, which is designed to track the performance of approximately 30 clean energy-related companies. Overall, ICLN gives investors access to:
- Exposure to companies that produce energy from solar, wind, and other renewable sources
- Targeted access to clean energy stocks from around the world
- Use to express a global sector view
- Strong performance, with a fund up over 180% within the past year
“Given the narrow focus, ICLN likely doesn’t deserve a huge weighting in a long-term portfolio, but can be useful as a satellite holding to cover a corner of the market that is often overlooked by broad-based funds,” ETF Database analysis suggested. “For investors who maintain a long-term bullish outlook on the alternative energy space, this fund can be a nice way to achieve broad-based exposure; ICLN includes companies engaged in various sub-sectors, such as wind power, solar power, and other renewable sources.”
Political Tailwinds for ICLN
Biden’s green energy initiatives should help give the ETF a further boost the next four years.
“In 2021, the Democrats have a nominal majority in both chambers of Congress. Furthermore, President Joseph Biden has demonstrated a commitment to promoting renewable energy,” an InvestorPlace article noted. “With members of his political party in the Senate and the House of Representatives on his side, Biden may be able to push through significant green energy legislation over the coming years.”
“Even beyond that, Biden has the power to enact executive orders and he’s already demonstrated his willingness to do so,” the article added.
More Upside Ahead?
A buying opportunity for ICLN could be brewing as the fund trades closer to its 200-day moving average. The 50-day moving average is still above its 200-day figure, highlighting momentum strength in ICLN.
Prospective buyers looking for an area of value can watch ICLN to see how it reacts to the $22.97 resistance level made on March 5. If it breaks below that price, it could move even closer to its 200-day moving average, giving buyers reason to pull the trigger.
The relative strength index (RSI) is still not yet in oversold levels. This is another indicator traders and investors alike can watch.
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