Too Many Clean Energy ETFs Crowding the Field

ETFs and ETNs are the best way to gain simple exposure to the stock, bond, currency and commodity markets. However, though I never thought I'd say this,the ETF house is too crowded.

It pains me to spend precious web log space by adding fuel to the "Worst ETF Debate." Yet some of the investment concepts coming to market are dreadful. Others fail to distinguish themselves from a competitor's exchange-traded indexing vehicle.

Let's use an example: energy. This one used to be so simple, all you had to do was swipe your card at the Energy Select SPDR (XLE) pump. Your wallet might have gushed 30% per year for 5 years.

Now there are nearly 30 options. You can go "green." You can go "clean." You can go small, large, global or international. You can dig, explore, produce or serve. You can go long or you can go short. You can be dynamic, progressive or alternative.

Granted, I am being a bit facetious. I do believe that some of the energy-relating slicing-n-dicing makes sense. For instance, the SPDR Oil & Gas Exploration/Production Fund (XOP) and the PowerShares WilderHill Clean Energy Fund (PBW) are as different as oil and vinegar.

Unfortunately, the interest in the alternative energy sub-sector spawned knock-offs, rip-offs and turn-offs. We must contend with far more than the original Clean Energy Fund (PBW), but also:

PowerShares Global Clean Energy (PBD)
Market Vectors Global Alt Energy (GEX)
PowerShares Progressive Energy (PUW)
iShares S&P Global Clean Energy
3 (count-em) Global Nuclear Energy Funds... iShares S&P, Market Vectors and PowerShares and...

Elements CS Global Warming (GWO).

Granted, not every index fund or indexing note is going to make it. In fact, it wasn't that long ago when Claymore had to kill 11 or more of their products.

Still, it'd be nice to see these companies think a bit less about marketing anything and everything. Otherwise, investor advocates like myself will have no choice but to explain that the 5 or 6 "Global Clean Warming Energy" funds have nearly identical performance returns.

Comments

[mlknyu:]

Still, the ETFs are different. PBW is U.S. only. PBD is global, as is GEX, but GEX has less holdings of more established companies, while PBD contains more global speculative companies. I don't know about PUW.

2008 Apr 28 12:44 AM