Seizing Sustainable Opportunities, This ETF Is Poised for Leadership

The seismic shift toward sustainability in investment portfolios will leave some strategies behind while putting the spotlight on a new generation of leaders. The ALPS Clean Energy ETF (ACES) is in the latter category.

Underscoring its utility at a time when more advisors and investors are investigating sustainable investing options, ACES provides exposure to multiple corners of the renewable energy universe whereas some old guard rivals focus on a singular concept, such as wind or solar.

Adding to the long-term case for ACES is increasing recognition that renewable energy and sustainability benefit investor outcomes.

“Conventional economics has been seriously damaging the environment and our society for decades. Every parent, consumer, and investor knows it; fossil fuel promoters and ESG laggards especially,” writes David Maywald for FactSet. “Poor disclosure, free pollution, and misaligned remuneration are part of the problem. But sustainable investment and renewable energy are an essential part of the solution.”

The Future Is Now

ACES’ components provide the products and services that enable the evolution of a more sustainable energy sector. The green energy companies are engaged in renewable energy sources, including solar power, wind power, hydroelectricity, geothermal energy, biomass, biofuels, and tidal/wave energy; clean technologies, including electric vehicles, energy storage, lithium, fuel cell, LED, smart grid, and energy efficiency technologies; and other emerging clean energy activities and technologies.

Important to the ACES thesis is that socially responsible investing is gaining traction with investors and emphasizing environmental stewardship is easy for investors to enter the space.

“The irresistible momentum for sustainable investment is about millions of people who move their money and work together for positive change, which expands to hundreds of millions of people and eventually to billions of people,” notes Maywald. “Sustainable finance is also about the new innovative businesses that serve these customers as well as established businesses having to catch up to where the market has moved.”

Additionally, there’s global momentum for increased sustainability, both in developed and emerging markets.

“A survey of G-20 officials and central bankers shows strong support for climate-friendly measures (green projects create more jobs, they deliver a higher short-term return, and they lead to long-term cost savings),” “The European Commission president is putting their Green Deal at the center of the recovery plan of the European Union (EU), pushed along by a very broad ‘green recovery alliance.’ One-quarter of the total EU spending (€1.1 trillion budget plus €750 billion recovery plan) will go to climate initiatives.”

Other alternative energy ETFs include the First Trust Global Wind Energy ETF (FAN) and the SPDR Kensho Clean Power ETF (CNRG).

For more on cornerstone strategies, visit our ETF Building Blocks Channel.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.