Clean energy has rebounded in recent months, posting impressive returns across all sub-sectors in the industry.
The top performing funds over four weeks as of August 24 include the SPDR S&P Kensho Clean Power ETF (CNRG), the ALPS Clean Energy ETF (ACES), and the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN).
CNRG, which has a 45 basis point expense ratio, has returned 20.1% over four weeks as of August 24, according to VettaFi.
CNRG focuses on U.S.-listed companies whose products and services are driving the innovation behind clean power. The underlying index is a combination of two sub-indexes, one that follows the manufacture of technology used in renewable energy, and another that follows companies offering products and services related to renewable energy, according to VettaFi.
The methodology involves scanning company documents and SEC submissions for search terms to determine inclusion in the index. Selected stocks are deemed either core or non-core depending on whether renewable energy is a central focus of the company. Holdings are initially weighted equally, with an overweighting factor applied to core stocks.
ACES has returned 19.84% over four weeks and carries a 55 basis point expense ratio.
The fund tracks a market-cap-weighted index of North American companies involved in the clean energy industry. The index provider targets companies that enable the evolution of a more sustainable energy sector, and includes activities such as renewable energy sources (solar, wind, hydropower, biofuels), clean technologies (electric vehicles, battery technology, fuel cells, smart grids), and any other emerging clean energy technology.
All companies involved in clean energy businesses and listed in the U.S. or Canada are eligible for inclusion. Constituents are market-cap-weighted, subject to a 5% cap on individual stocks.
QCLN has returned 15.08% over four weeks and has an expense ratio of 58 basis points.
QCLN invests in companies that are engaged in a variety of different activities related to several green energy sub-sectors. By including companies focused on biofuels, solar energy, and advanced batteries (among others), QCLN casts a wide net of exposure. That, along with a relatively deep basket of individual companies, may make it appealing for those seeking broad-based exposure to alternative energy sources.
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