Traditional sources of energy like oil are constantly being challenged by alternative sources as more green initiatives become paramount, which makes alternative energy ETFs an option when investors want exposure to the energy sector.
“This year will likely be remembered as a period of technology consolidation rather than breakthrough innovation in the energy industry,” wrote Jason Deign in Green Tech Media. “Emerging industries such as offshore wind and lithium-ion battery storage have gone from strength to strength.”
One ETF to look at is the Global X Lithium & Battery Tech ETF (NYSEArca: LIT). LIT, which is nearly nine years old, tracks the Solactive Global Lithium Index.
The underlying index is designed to measure broad-based equity market performance of global companies involved in the lithium industry. One of the oldest thematic ETFs, LIT is designed to provide exposure to “the full lithium cycle, from mining and refining the metal, through battery production,” according to Global X.
Lithium-ion battery capacity is vital because one of the primary factors car buyers consider when evaluating electric vehicles is how long those vehicles can run on a single charge. Tesla’s dominance in the booming electric vehicle market will also move the demand for lithium.
“The supply chain is constantly battling disruptions resulting from limited mineral supply,” said Lindsay Gorrill, CEO at the energy storage firm Kore Power. “My prediction for 2020 is that the battery development and manufacturing supply chain will improve to meet explosive market demand for residential, industrial and utility-scale operations.”
Investors who want to capitalize on increasing reliance on wind as an alternative energy resource, they can look at the First Trust Global Wind Energy ETF (NYSEArca: FAN). The fund seeks investment results that correspond generally to the price and yield of an equity index called the ISE Clean Edge Global Wind EnergyTM Index.
FAN’s index provides a benchmark for investors interested in tracking public companies throughout the world that are active in the wind energy industry. In order to be eligible for inclusion in the index, a security must be issued by a company that is actively engaged in some aspect of the wind energy industry.
For investors looking for more broad-based exposure to alternative energy can give the SPDR Kensho Clean Power ETF (NYSEArca: CNRG) a look. CNRG seeks to provide investment results that correspond generally to the total return performance of the S&P Kensho Clean Power Index, which is designed to capture companies whose products and services are driving innovation behind clean power. The fund may invest in equity securities that are not included in the index, cash and cash equivalents or money market instruments, such as repurchase agreements and money market funds.
For more market trends, visit ETF Trends.