As oil prices remain in constant flux following its run into negative territory in April, energy investors might be looking towards alternative energy options, which could put solar energy into the forefront.
“The global energy sector is undergoing fundamental changes due to the Covid-19 pandemic, and with the industry that emerges from the crisis ‘significantly different from the one that came before,’ prospects for solar look good, according to a study by the International Energy Agency (IEA),” a PV Magazine article noted. “However, warned the IEA in its World Energy Investment 2020 report, the impact of the coronavirus crisis is dramatically affecting energy investment, with small scale solar in Europe among the segments suffering from a lack of consumer confidence amid fears of a looming global depression.”
The article went on to say that “investment in solar has declined, though, the technology’s inherent advantages are likely to make it a solid choice for investors going forward, according to the intergovernmental body.”
“The speed and scale of the fall in energy investment activity in the first half of 2020 is without precedent,” stated the IEA. “Many companies reined in spending; project workers have been confined to their homes; planned investments have been delayed, deferred or shelved; and supply chains interrupted.”
As such, one fund to look at is the Invesco Solar ETF (NYSEArca: TAN). TAN, which started back in 2008, seeks to track the investment results of the MAC Global Solar Energy Index, which is designed to provide exposure to companies listed on exchanges in developed markets that derive a significant amount of their revenues from the following business segments of the solar industry: solar power equipment producers including ancillary or enabling products.
Other Alternative Energy ETFs to Consider
While solar is shining, the sun can’t have all the fun—alternative sources of energy like wind and lithium funds could also experience more growth. Investors who want to capitalize on the increasing reliance on the wind as an alternative energy resource, they can look at the First Trust Global Wind Energy ETF (NYSEArca: FAN), which seeks investment results that correspond generally to the price and yield of an equity index called the ISE Clean Edge Global Wind EnergyTM Index.
With the growth of electric vehicles, another 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.
For more market trends, visit ETF Trends.