The Invesco Solar ETF (TAN) is the top-performing non-leveraged ETF over the past five years, a role the fund has held for several months.
TAN takes the top spot on VettaFi’s list of the 100 Highest 5-Year ETF Returns, boasting a 23.5% five-year annualized return. TAN is trailed by the VanEck Semiconductor ETF (SMH) and the SPDR S&P Semiconductor ETF (XSD), which have returned 21.2% and 20.9%, respectively, annualized.
The fund has declined 4.1% year-to-date and is current trading below its recent and all-time highs. The fund is well positioned with the passing of the Inflation Reduction Act last August. The bill promises to offer a raft of tax credits to help stimulate the adoption of clean energy technologies. It also offers spending for low-income and minority communities that suffer disproportionately from pollution.
See more: “TAN Jumps 17% Last Month, Remains Top ETF by 5-Year Returns”
Under the Hood of TAN
TAN delivers targeted exposure to companies in the solar energy industry. The fund includes 46 securities as of May 8, including First Solar Inc. (FSLR), Enphase Energy Inc. (ENPH), SolarEdge Technologies Inc. (SEDG), GCL Technology Holdings Limited (3800), and Sunrun Inc. (RUN).
TAN’s underlying index includes solar power equipment producers and other solar energy storage systems. It also includes suppliers of raw materials, components, or services to solar producers of developers, as well as companies that produce solar equipment fabrication systems, and companies involved in solar power system installation, development, integration, maintenance, or finance. Companies that produce hydrogen using solar energy, companies that produce solar-powered charging systems for electric vehicles or other electrical devices, companies selling systems that use solar thermal energy to produce heat or electricity, and companies that sell electricity that derives from solar power are also eligible for inclusion, according to the regulatory filings.
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