Top 10 Alternative Energy ETFs

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 |  Includes: FAN, GEX, ICLN, KWT, NLR, PBD, PBW, PWND, TAN
by: David Fry

There are currently less than 20 ETFs oriented to the alternative energy sector. Many are struggling to gain assets under management (AUM) and performance success. Some may not succeed as new technologies come and go. Previously, nuclear energy held great promise until the Fukushima plant disaster. There the plant was quite old with antiquated technology and was felled by unique circumstances. Nevertheless this blunted growth in the sector.

The energy sector remains volatile and politically controversial given the recent higher spikes in oil prices in 2008, 2011 and now again in early 2012. The struggle to move away from carbon-based energy sources seems now and again promising, but then not. U.S. companies within the solar energy complex have seen failures with some, like Solyndra, being afflicted by political controversies. The solar space in particular has seen Chinese products undercut U.S. solar panel manufacturers in price. This has caused many companies to either fail or be unable to remain competitive. Chinese companies are also dominating wind power sectors as well, noted in holdings for many wind-related ETFs. Politically, the U.S. government wants to place duties on Chinese products. This may help U.S. manufacturers briefly but negatively affect consumers at the same time.

Even as oil prices rise, any meaningful success will take years and decades to achieve success. Frankly, much of this has been due to nearly 40 years of political gridlock and an absence of leadership regarding overall energy policies.

As a result, and no matter how seductive alternative energy sources are and how high carbon-based fuel prices remain, little progress or profits have accrued to alternative energy companies and ETFs. As a result, you'll note ETF performance within the sector has been terrible overall.

ETFs are based on indexes tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones, and so forth.

To add value, we feature a technical view of conditions from monthly chart views where enough data is available. Simplistically, we recommend longer-term investors stay on the right side of the 12-month simple moving average. When prices are above the moving average, stay long; when below, remain in cash or short. Premium members to the ETF Digest receive added signals when markets become extended. Then DeMark indicators often trigger a signal to exit overbought/oversold conditions. Generally, these indicators, when used in this manner, help investors avoid sharp declines and/or reversals.

Given the state of AUM and the serious declines in prices for the sector overall, investors may need to evaluate the risks that some ETFs in the category will fail, merged and/or be closed.

#10: PowerShares Global Wind Energy ETF (NASDAQ:PWND)

PWND follows the NASDAQ OMX Clean Edge Global Wind Energy Index, which is a lot of words to say "wind ETF." The fund was launched July 2008. The expense ratio is 0.75%. AUM is just shy of $11M, which is again below the threshold for reasonable issue success. Average daily trading volume is just under 6K shares.

As of May 2012 the annual dividend yield is 0.40% and YTD performance -19.42%. The 1 YR return was -22.56%.

PWND Top 10 Holdings & Weighting

Data as of May 2012

  • Vestas Wind Systems A/S (VWS): 10.82%
  • Enel Green Power S.p.A. (EGPW): 9.78%
  • China Longyuan Power Group Corp Ltd. (OTCPK:CLPXF): 9.26%
  • EDP Renovaveis SA (EDPR): 8.86%
  • Nordex AG (NDX1): 4.43%
  • Gamesa Corporacion Tecnologica, S.A. (NYSE:GAM): 4.23%
  • Innergex Renewable Energy, Inc. (INE): 4.16%
  • Zoltek Companies, Inc. (NASDAQ:ZOLT): 4.14%
  • Huaneng Renewables Corporation Ltd (00958): 4.01%
  • China High Speed Transmission Equipment Group Co., Ltd. (OTC:CHSTF): 3.68%

Click to enlarge all images.

PWND Region Breakdown

pwndClick to enlarge

#9: Market Vectors Energy ETF (NYSEARCA:KWT)

KWT follows the Ardour Solar Energy Index includes publicly traded companies globally that derive two-thirds of their revenue from solar power and related products. Weighted companies receive 90% of their revenues in this manner. The fund was launched April 2008. The expense ratio is 0.65%. AUM is $10.7M and average daily trading volume is around 49K shares. As of May 2012 the annual dividend yield is 8.15% and YTD performance -24.93%. The 1 YR return was -74.03%.

(Note: Most ETFs need to have AUM over $25M to be considered a success. Most losses of AUM are due to market conditions but that doesn't mean the ETF can survive in this condition and not be folded in with another issue for example or even cease to exist.)

KWT Top 10 Holdings & Weightings

Data as of May 2012

  • GT Advanced Technologies Inc (GTAT): 9.79%
  • MEMC Electronic Materials Inc (WFR): 8.57%
  • Trina Solar Limited ADR (NYSE:TSL): 6.98%
  • First Solar, Inc. (NASDAQ:FSLR): 6.28%
  • Gintech Energy Corporation (3514): 5.88%
  • Neo Solar Power Corp. (3576): 5.32%
  • LDK Solar Company, Ltd. ADR (NYSE:LDK): 5.19%
  • Suntech Power Holdings Co., Ltd. ADR (NYSE:STP): 4.71%
  • SolarWorld AG (SWV): 4.42%
  • Renewable Energy Corporation ASA (REC): 4.37%

KWT Region Breakdown

kwtClick to enlarge

#8:First Trust ISE Global Wind Energy ETF (NYSEARCA:FAN)

FAN follows the ISE Global Wind Energy Index which consists of companies exclusively involved in the wind energy business account for a 66% index weight. The fund was launched in June 2008. The expense ratio is 0.60%. AUM equals $21M with average daily trading volume of 11K shares.

As of May 2012 the annual dividend yield is 0.91% and YTD performance -21.59%. The 1 YR return was -44.70%.

FAN Top 10 Holdings & Weightings

Data as of May 2012

  • China Longyuan Power Group Corp Ltd. (OTCPK:CLPXF): 7.46%
  • Nordex AG (NDX1): 7.19%
  • Iberdrola SA (IBE): 6.73%
  • EDP Renovaveis SA (EDPR): 6.61%
  • Vestas Wind Systems A/S (VWS): 6.49%
  • Gamesa Corporacion Tecnologica, S.A. : 4.43%
  • Arise Windpower AB (NYSE:AWP): 4.31%
  • Greentech Energy Systems A/S (NYSE:GES): 3.95%
  • Infigen Energy (NYSE:IFN): 3.15%

FAN Region Breakdown

fanClick to enlarge

#7: iShares S&P Global Clean Energy Index Fund (NASDAQ:ICLN)

ICLN tracks the S&P Global Clean Energy Index. The fund was launched in June 2008. The expense ratio is 0.48%. AUM exceeds $29M and average daily trading volume is 17K shares. As of May 2012 the annual dividend yield is 5.27% and YTD performance -13.00%.

The 1 YR return was --54.24%.

ICLN Top 10 Holdings & Weightings

Data as of May 2012

  • China Everbright International Ltd. (00257): 5.78%
  • Energy Company of Parana ADR (NYSE:ELP): 5.32%
  • Vestas Wind Systems A/S (VWS): 5.23%
  • China Longyuan Power Group Corp Ltd. (OTCPK:CLPXF): 5.14%
  • National Electricity Company of Chile, Inc. ADR (NYSE:EOC): 5.11%
  • Energy Company of Minas Gerais ADR (NYSE:CIG): 5.03
  • Verbund AG (NYSE:VER): 4.96%
  • Covanta Holding Corporation (NYSE:CVA): 4.90%
  • Tohoku Electric Power Co Inc Common Stock: 4.85%
  • Hokuriku Electric Power Co Common Stock: 4.80%

ICLN Region Breakdown

iclnClick to enlarge

#6: PowerShares Global Clean Energy ETF (NYSEARCA:PBD)

PBD follows the WilderHill Global Innovation Index which is distinguished marginally by an exposure to companies with technologies facilitating cleaner energy. The fund was launched June 2007. The expense ratio is 0.75%.

AUM equal $71M and average daily trading volume is around 29K shares. As of May 2012 the annual dividend yield is 1.88% and YTD performance -8.62%. The 1 YR return was -47.14%.

PBD Top 10 Holdings & Weightings

Data as of May 2012

  • Energy Development Corp. (NYSEARCA:EDC): 2.22%
  • Verbund AG (VER): 2.11%
  • Enel Green Power S.p.A. (EGPW): 2.08%
  • Brookfield Renewable Energy Corp (BRPFF): 2.05%
  • LSB Industries, Inc. (NYSE:LXU): 2.05%
  • Ormat Technologies, Inc. (NYSE:ORA): 2.04%
  • Xinjiang Goldwind Science & Technology Co., Ltd. (02208): 1.85%
  • China Longyuan Power Group Corp Ltd. (OTCPK:CLPXF): 1.82%
  • China Everbright International Ltd. (00257): 1.79%
  • Acciona,S.A. (ANA): 1.77%

PBD Region Breakdown

pbdClick to enlarge

#5: Market Vectors Global Alternative Energy ETF (NYSEARCA:GEX)

GEX tracks the Ardour Global Index which follows global companies principally involved in the alternative energy business. The index is a rules-based, float adjusted index. The fund was launched May 2007. The expense ratio is 0.62%.

AUM is over $48M and average daily trading volume exceeds 19K shares. As of May 2012 the annual dividend yield is 3.50% and YTD performance -12.73%. The 1 YR return was also quite negative at -57.13%.

GEX Top 10 Holdings & Weightings

Data as of May 2012

  • Cooper Industries PLC. (CBE): 10.66%
  • Cree, Inc. (NASDAQ:CREE): 6.36%
  • Enel Green Power S.p.A. (EGPW): 4.93%
  • Cosan Ltd (NYSE:CZZ): 4.44%
  • Verbund AG (VER): 4.42%
  • Itron Inc. (NASDAQ:ITRI): 4.19%
  • EnerSys, Inc. (NYSE:ENS): 4.05%
  • Covanta Holding Corporation : 4.04%
  • Tesla Motors, Inc. (NASDAQ:TSLA): 4.01%

GEX Region Breakdown

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#4: Market Vectors Uranium + Nuclear Energy ETF (NYSEARCA:NLR)

NLR follows the DAXglobal Nuclear Energy Index. The fund was launched August 2007. The expense ratio is 0.61 %. AUM are now $76M and average daily trading volume at 46K shares. As of May 2012 the annual dividend yield is 14.08% (this may be subject to significant change) and YTD performance -9.73%. The 1 YR return was -32.33%.

NOTE: Japan's Fukushima plant disaster has hit the sector hard. Investors should remember while new nuclear plants will be difficult to permit ongoing servicing and construction of new plants will continue albeit with the latter at slower pace. Political risks are high in the sector and the attraction of the dividend yield may mislead as some companies "may" reduce these given the business slowdown.

NLR Top 10 Holdings & Weightings

Data as of May 2012

  • Electricité de France S.A. (OTC:ECIFF): 7.70%
  • Mitsubishi Heavy Industries, Ltd. (OTCPK:MHVYF): 7.31%
  • Cameco Corp (NYSE:CCJ): 6.48%
  • Exelon Corp (NYSE:EXC): 6.47%
  • Uranium One, Inc. (NYSEMKT:UUU): 5.84%
  • Denison Mines Corporation (NYSEMKT:DNN): 5.82%
  • Areva (AREVA): 5.82%
  • Constellation Energy Group Inc (NYSE:CEG): 5.26%
  • JGC Corp. (1963): 5.05%
  • Paladin Energy Ltd. (NYSEARCA:PDN): 4.93%

NLR Region Breakdown

nlr

#3: PowerShares WilderHill Progressive Energy ETF (NYSEARCA:PUW)

PUW follows the WilderHill Progressive Energy Index which includes issues found within PBW but adds some fossil fuel bridge technologies aimed at cleaner use of these fuels. Additionally, some nuclear issues have been included. The issue was launched October 2006.

The expense ratio is 0.60%. AUM equal $43M with average daily trading volume around 4K shares. As of May 2012 the annual dividend yield is 1.02% and YTD performance 0.58%. The 1 YR return was -20.96%.

Note: PUW has a more inclusive holding of alternative energy including nuclear for example.

PUW Top 10 Holdings & Weightings

Data as of May 2012

  • Elster Group SE ADR (ELT): 2.25%
  • Emerson Electric Co. (NYSE:EMR): 2.21%
  • General Cable Corporation (NYSE:BGC): 2.21%
  • A.O. Smith Corporation (NYSE:AOS): 2.18%
  • LSB Industries, Inc. : 2.16%
  • Regal-Beloit Corporation (NYSE:RBC): 2.15%
  • Koninklijke Philips Electronics NV ADR (NYSE:PHG): 2.15%
  • Woodward, Inc. (NASDAQ:WWD): 2.14%
  • Acuity Brands Inc (NYSE:AYI): 2.14%
  • Cooper Industries PLC. : 2.13%

PUW Region Breakdown

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#2: Guggenheim Solar ETF (NYSEARCA:TAN)

TAN follows the MAC Global Solar Energy Index which has a more global focus. It's constructed with constituents including ADRs, in all phases of the solar industry from developers, module manufacturers, marketing, selling and financing. The fund was launched April 2008.

The expense ratio is 0.65%. AUM is roughly $56M and average daily volume is over 104K shares. As of May 2012 the annual dividend yield is 1.09% and YTD performance -25.71%. The 1 YR return was -74.22%.

Note: Effective February 15, 2012 TAN had a 10 for 1 reverse split as the share price had gotten too low for the sponsor.

TAN Top 10 Holdings & Weightings

Data as of May 2012

  • GCL-Poly Energy Holdings Limited (03800): 13.19%
  • First Solar, Inc. : 11.70%
  • GT Advanced Technologies Inc : 7.37%
  • Meyer Burger Technology AG (MBTN): 6.64%
  • Trina Solar Limited ADR : 4.78%
  • SMA Solar Technology AG (S92): 4.73%
  • MEMC Electronic Materials Inc : 4.44%
  • SolarWorld AG (SWV): 4.07%
  • Suntech Power Holdings Co., Ltd. ADR : 3.80%
  • Yingli Green Energy Holding Company, Ltd. (NYSE:YGE): 3.78%

TAN Region Breakdown

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#1: PowerShares WilderHill Clean Energy ETF (NYSEARCA:PBW)

PBW tracks the WilderHill Clean Energy Index. It seeks to focus on green energy technologies generally from renewable sources of energy. It was launched March 2005 and I was pleased to interview Professor Wilder then. It is the oldest of the alternative energy ETF issues. The expense ratio is 0.60%.

AUM equal $153M and average daily trading volume is around 191K shares. As of May 2012 the annual dividend yield is 3.15% and YTD performance -14.50%. The 1 YR return was -53.64%.

PBW Top 10 Holdings & Weightings

Data as of May 2012

  • Zoltek Companies, Inc. : 2.43%
  • KiOR Inc (NASDAQ:KIOR): 2.37%
  • Molycorp, Inc. (MCP): 2.28%
  • Amerigon, Inc. (ARGN): 2.22%
  • Fuelcell Energy, Inc. (NASDAQ:FCEL): 2.22%
  • Air Products & Chemicals Inc (NYSE:APD): 2.21%
  • Suntech Power Holdings Co., Ltd. ADR : 2.20%
  • Cree, Inc. : 2.17%
  • Cosan Ltd : 2.17%
  • AMSC (NASDAQ:AMSC): 2.16%

PBW Region Breakdown

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We rank the top 10 ETF by our proprietary stars system as outlined below. However, given that we're sorting these by both short and intermediate issues we have split the rankings as we move from one classification to another.


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

Again, given nuclear disasters, politics and incoherent energy policies risks within this sector remain high. Alternative energy has in its infancy become a fad not yet becoming a viable industry. This is similar in many ways to biotechnology when the industry was just getting some attention in the 1980s. It took quite a while before that sector gained durable traction and even then there were no ETFs.

New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned.

As stated with other sectors, remember ETF sponsors must issue and their interests aren't aligned with yours. They have a business interest and wish to have a competitive presence in any popular sector.

For further information about portfolio structures using technical indicators like DeMark and other indicators see www.etfdigest.com. You may follow us on Facebook as well and join our group conversations. You may address any feedback to: feedback@etfdigest.com

Source: Data is from ETF sponsors and various ETF data providers.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.