Looking at Alternative Energy With ETFs

by: Tom Lydon

Renewed fear and scrutiny over the nuclear power sector have investors looking to alternative-energy sector ETFs.

As nuclear-power stocks experience a sell-off, the alternative-energy sector saw increased inflows, which experts believe will continue in the coming months, writes Jessica Toonkel for InvestmentNews. Alternatives usually come into favor when there are natural disasters related to oil and nuclear energy or when pricing gets too high.

Speaker of the House John Boehner said on Monday that there will be meetings this week to discuss the Japanese nuclear power plant situation and the potential for similar catastrophes here in the U.S., which means that future nuclear projects will likely include costlier added security. However, if damages in nuclear plants in Japan are contained, don’t expect big changes.

No new nuclear power plant has come online in the U.S. since 1974, mainly due to the Three Mile Island incident, and nuclear energy only accounts for around 20% of total electricity supply, writes Martin D. Weiss for Money and Markets. On Friday, the House of Representatives scheduled a hearing on nuclear energy, and we can probably expect the focus to shift to Japan and greater political pressure to delay or cancel current plans.

On Monday, the Market Vectors Nuclear Energy (NYSEARCA:NLR) fell almost 13%; iShares S&P Global Nuclear Energy (NASDAQ:NUCL) declined more than 11% off its opening price; and Global X Uranium (NYSEARCA:URA) plummeted 18%. In contrast, alternative energy ETFs saw an uptick in prices.

Government incentives and profitability in alternatives continue to be relatively low. Nevertheless, increased public pressure and government mandates could be a boost in the arm for alternatives.

On Monday:

  • Market Vectors Global Alternative Energy (NYSEARCA:GEX) +3.0%, $136.5M in assets
  • Guggenheim Global Solar (NYSEARCA:TAN) +5.4%, $168.7
  • First Trust Global Wind Energy (NYSEARCA:FAN) +3.0%, $53.7M
  • Market Vectors Solar Energy (NYSEARCA:KWT) +7.4%, $37.8M
  • siShares S&P Global Clean Energy Index Fund (NASDAQ:ICLN) +4.5%, $55.6M
  • United States Natural Gas (NYSEARCA:UNG) +0.2%, $2285.5M
  • Teucrium Natural Gas (NYSEARCA:NAGS) +1.9%, $2.2M

Max Chen contributed to this article.