Clean energy ETFs have seen a resurgence in interest following their May rebound, further propelled by the enactment of the Inflation Reduction Act into law in August.
The Invesco Solar ETF (TAN), in particular, has been among the funds garnering the most advisor interest in the current environment. TAN has $3 billion in assets under management and charges a 69 basis point expense ratio.
TAN took in the third most in net flows during August, trailing only the Invesco NASDAQ 100 ETF (QQQM) and the Invesco S&P 500 Low Volatility ETF (SPLV). TAN took in $285 million during August, offsetting outflows from earlier in the year; year-to-date inflows totaled $99 million as of August 31. The fund has taken in $35 million between September 1 and September 21, according to VettaFi.
“With recently approved government spending to combat climate, advisors are seeking out clean energy investment strategies,” Todd Rosenbluth, head of research at VettaFi, said. “TAN provides diversified exposure to solar energy-related companies that have long-term potential.”
The Inflation Reduction Act promises to offer a raft of tax credits to help stimulate the adoption of clean energy technologies, as well as spending for low-income and minority communities that suffer disproportionately from pollution.
Consumer tax credits for EVs and household renewable energy installations/appliances, tax credits for EV battery and materials suppliers, tax credits for zero-carbon power projects and green hydrogen production, as well as extended tax credits for biodiesel are some of the major highlights of the potential bill.
TAN delivers targeted exposure to solar power energy, making it potentially useful for both betting on long-term adoption of this energy source or capitalizing on perceived short-term mispricings, according to VettaFi.
The fund includes 44 securities as of September 21. TAN’s hyper-targeted focus makes it most appropriate for investors looking to overweight the solar power space.
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