Green and Alternative Energy ETFs List
(click on symbol for data and articles)
Claymore Global Solar Energy ETF (NYSEARCA:TAN)
Claymore/LGA Green ETF (NYSEARCA:GRN)
First Trust ISE Global Wind Energy Index Fund (NYSEARCA:FAN)
First Trust NASDAQ Clean Edge ETF (NASDAQ:QCLN)
Global Warming ELEMENTS ETN (NYSEARCA:GWO)
PowerShares Cleantech Portfolio ETF (NYSEARCA:PZD)
PowerShares Global Clean Energy Portfolio ETF (NYSEARCA:PBD)
PowerShares Global Nuclear Energy Portfolio ETF (NYSEARCA:PKN)
PowerShares Nasdaq OMX Clean Edge Global Wind Energy ETF (NASDAQ:PWND)
PowerShares WilderHill Clean Energy Portfolio ETF (NYSEARCA:PBW)
PowerShares WilderHill Progressive Energy Portfolio ETF (NYSEARCA:PUW)
Van Eck Market Vectors Environmental Services ETF (NYSEARCA:EVX)
Van Eck Market Vectors Global Alternative Energy ETF (NYSEARCA:GEX)
Van Eck Market Vectors Nuclear Energy ETF (NYSEARCA:NLR)
What Are They?
- Green ETFs hold a basket of alternative energy stocks or stocks of companies perceived to support energy production with lower environmental impact than fossil fuels produce.
Why & How To Use Them
- Green ETFs tend to be narrow, usually focused on alternative energy stocks. The lack of diversification makes them less suitable as a core holding for long term investors. Moreover, since alternative energy stocks are often driven by sentiment and news, green ETFs may be significantly more volatile than broader sector funds.
- Long term investors can use green ETFs to supplement a core porfolio of index ETFs, "tilting" the portfolio to alternative energy stocks in the hope that those stocks will outperform the broader market in the long term.
- Green ETFs are also attractive to short term traders, as they tend to be volatile but less risky than individual stocks.
What to Look Out For
- Green ETFs tend to have higher expense ratios than broader US index ETFs. Check the annual expense ratios before you buy.
- There are dramatic differences between the holdings of the green ETFs, leading to dramatic differences in the ETFs' performance. See the "Further Reading" section below for more detail.
- For discussion of their differences between the green ETFs, see The Green Investor: Choosing An Alternative Energy ETF (Mick Weinstein), Tree Huggers Unite! A Survey of Cleantech ETFs (Richard Kang), PowerShares' New Alternative Energy ETFs (Richard Kang) and New Solar ETFs: Here Come the Suns (Hard Assets Investor).
- Christopher Holt asks 'Is There Alternative Beta in Alternative Energy ETFs?'
- For a more skeptical look at green ETFs, see Green ETFs: Good Cause Doesn't Always Produce Better Performance (Tom Lydon), Cleantech and Alt. Energy: The Next Tech Bubble? (Charles Morand), and Not All Is Green in Alt. Energy ETF Land (Murray Coleman).
- Other articles on ETFs in this list: PowerShares Goes Nuclear (Murray Coleman), Clean Energy ETFs are Volatile, but Hold Potential (Tim Plaehn).
- For a critique of narrow theme ETFs, see William Bernstein's Who Needs 'Em? The List of Obscure ETFs Grows.