Are you looking to add exposure to clean energy technology and advancements? You’re not alone – the global clean energy transition will change entire industries. Not only will the transition from fossil fuels impact energy generation, of course, but also areas as varied as agriculture, transportation, and even consumer goods. That may prompt investors to consider a clean energy ETF like, for example, the Fidelity Clean Energy ETF (FRNW) and the firms in which it invests.
FRNW tracks an adjusted market-cap-weighted index of global clean energy developed and emerging markets firms that make at least 50% of revenue from clean energy distribution, equipment manufacturing, and tech. The strategy charges a 39-basis point (bps) fee to track the Fidelity Clean Energy Index.
So, which firms does the clean energy ETF hold? One can start with Danish wind turbine manufacturer Vestas. FRNW weights Vestas as its highest-weighted firm per VettaFi. Vestas was founded in 1945 and doesn’t just construct but sells, installs, and services wind turbines.
Wind energy will be a vital part of the global transition away from fossil fuels, with major projects in the North Sea, for example. The cost of wind power has become much more competitive compared to fossil fuels. That could position turbine manufacturing as an intriguing investment opportunity.
The firm stands out as a market leader in North America, with 45,000 megawatts (MW) installed and more than 40,000 MW serviced in the U.S. and Canada. Per YCharts, the firm has seen 6.3% revenue growth over the last five years.
Firms to Watch in Clean Energy ETF FNRW
Moving to Asia, FRNW also holds Xinyi Solar (XISHY) per the most recently available data. XISHY started in 2008 when Xinyi Glass split off its photovoltaic glass side. In the mid-2010s, it grew to the largest solar cover glass producer in the world. XISHY has seen 16.5% revenue growth over five years, per YCharts. YTD, it has offered an 11.2% return on equity.
Finally, FRNW also invests in Enphase Energy (ENPH), a Fremont, California company that works in battery energy storage, EV charging stations, and solar micro-inverters. The firm focuses on the infrastructure that connects solar panels and other renewable energy generation to customers. The firm has seen 52.1% five-year revenue growth per YCharts, with a 74.8% return on equity (ROE) year to date.
The broader global transition to solar power will require significant manufacturing increases for photovoltaic glass and the power grid. The photovoltaic glass market looks set to potentially grow from $7.6 billion in 2022 to more than $110 billion by 2032, for example. For investors looking for clean energy leaders FRNW may be worth watching as the world transitions to clean energy.
Fidelity Investments® is an independent company, unaffiliated with VettaFi. There is no form of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the information herein. Fidelity Investments has not been involved with the preparation of the content supplied by VettaFi and does not guarantee, or assume any responsibility for, its content.
For more news, information, and strategy, visit the ETF Investing Channel