I made a small little post over at the r/stocks subreddit, this will be more in-depth. I hope this post helps people who are interested in Clean Energy Index Funds. I know there are specific ETFs such as TAN and FAN, but for this post, I will only focus on the main Index Funds.
One note to address before we go in is that these funds are non-diversified: when you invest in these funds, you are SOLELY investing in Clean Energy. Do not confuse this with global diversification, these funds are very focused investments
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The ETFs
iShares Global Clean Energy ETF (ICLN) - This one seems to be the most popular. It has the lowest ER out of the three standing at 0.46% and it's globally diversified. ICLN contains about 30 holdings, the top 10 holdings account for about 55%. This fund is 40% American and 60% Global. The top 3 countries as of now are the US, China, and New Zealand. Basic preliminary knowledge of each country's economic/political situation can be helpful. This fund contains a ton of CORE Renewable Stock (Biofuels, Ethanol, Geothermal, Hydroelectric, Solar, Wind) but it's devoid of Tech Built On Renewables such as EVs — which seem to be the talk of the town nowadays. This fund follows the S&P Global Clean Energy Index and it's Market-Cap Weighted. Overall, this fund focuses on the CORE components of renewable energy.
First Trust NASDAQ Clean Edge Green ETF (QCLN) - This one is similar to ICLN. This globally diversified fund has the second-lowest ER out of the three standing at 0.60%. If you are interested in American Renewable concentration, this may be a contender for you as QCLN is 80% US weight. The top 3 countries as of now are the US, China, and Canada. This fund follows the NASDAQ Clean Edge Green Energy Index which holds 44 stocks, of which their top 10 accounts for 54% of the whole fund. This fund is very similar to ICLN though containing a few differences. ICLN focuses on Core Renewable Energy whereas QCLN focuses on Core Renewable Energy + Tech Built On Renewables. Tech Built On Renewables would consist of technologies such as EVs and Light-Emitting Diodes, supported by companies like TSLA, NIO, and OLED.
ALPS Clean Energy ETF (ACES) - This one is a little different. ACES has the highest ER out of the three standing at 0.65%. This fund is NOT globally diversified, with its only focus on Canada (20%) and the US (80%). This fund follows a unique index known as the NACEX Index (which focuses on US/Canadian Clean Energy) and it is Market-Cap Weighted. The top 10 holdings account for about 50%. This ETF is very similar to QLCN (Core Renewable Energy + Tech Built On Renewables) minus the Global Diversification. Ultimately, this fund is a North American focused Renewable Energy Index Fund.
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Fact Sheets
What I provided is very brief. If you're serious about clean energy, I highly recommend you read each Index Funds fact sheet along with the prospectuses. This will educate you on the field more and provide more crucial data for each fund.
ACES - https://www.alpsfunds.com/api/resources/77117043443a4093f7a3b3a4fce8989f.pdf
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The main difference between each of these funds really comes down to the underlying holdings, sector allocations, and global diversification. Analyze your Risk Tolerance and Circle Of Competence in terms of holding/sector/globality for each fund before making a decision.
Disclaimer: I am NOT a financial expert. You MUST do your own diligence -- this is ONLY for educational purposes.
Also sorry for leaving Invesco WilderHill Clean Energy ETF (PBW) out. If anyone wants to comment some information on that Index Fund down below, feel free.
- Naitor295
Submitted October 18, 2020 at 08:15PM by Naitor295 https://ift.tt/3k5R1v3
