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First Trust NASDAQ Clean Edge Green Energy Index ETF Provides High US Exposure


  • Under President Biden, companies related to the New Green Deal should benefit even if the Republicans control the Senate.
  • Many Clean Energy ETFs have a large International exposure giving investors a choice where to focus their assets.  This one is US-centered.
  • QCLN provides a nice choice to make money and feel good while you are doing it.  That said, the current price has me giving it a Neutral rating.


Under President Biden, companies related to the New Green Deal should benefit. The Democratic Party kept the House but with a smaller margin, about half what they had before the election as I write this. Control of the Senate won’t be decided until early January when both Senate races in Georgia are decided. The Republicans need one seat to control; otherwise VP Harris has the tie-breaking vote. History says the President’s party usually looses seats in the Mid-Term election so that could play into how fast and long the United States tackles climate change and the stocks owned by clean energy funds benefit. Most stocks and funds have had a great run-up to the election so a correction could happen over the next few months.

Dissecting First Trust NASDAQ Clean Edge Green Energy Index ETF

This is how First Trust defines NASDAQ:QCLN:

The First Trust NASDAQ® Clean Edge® Green Energy Index Fund is an exchange-traded index fund. The objective of the Fund is to seek investment results that correspond generally to the price and yield (before the Fund's fees and expenses) of an equity index called the NASDAQ® Clean Edge® Green Energy IndexSM.

Source: First Trust

QCLN has $330m in AUM with a .60% expense ratio. This isn’t a fund for income investors as the yield is only .31%. The ETF started in early 2007.

To understand any index-based ETF, it is best to start by looking at their index. Unlike an actively-managed fund, the index will dictate the assets in the fund.

The Nasdaq Clean Edge Green Energy Index (CELS) is a modified market capitalization-weighted index designed to track the performance of companies that are manufacturers, developers, distributors, and/or installers of clean-energy technologies. Tracking U.S.-listed pure play companies active in the clean energy market, including renewables (solar & wind), energy storage, and electric vehicles.

This article was written by

Retired Investor profile picture

Retired Investor has been investing since the 1980s and has a background in data analysis and pension fund management. He writes articles to help others prepare for retirement by investing in CEFs, ETFs, BDCs, and REITs. He is a long only investor and shares strategies for trading options with a focus on cash-secured-puts.

He is a contributing author to the investing group Hoya Capital Income Builder. Hoya specializes in the portfolio management of publicly traded real estate securities and dividend ETFs. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

As with any article focused on a single fund, no investment advice is given or implied. Information presented should be used as a starting point as each investor has different needs and risk tolerance.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (22)

Retired Investor profile picture
For those looking at clean energy funds, SA published this one today-excellent article. seekingalpha.com/...
Retired Investor profile picture
PBD was covered recently, readers might want to check out: seekingalpha.com/...
From August till today I got 37% up when all other index funds are around 7-10%. I was not sure why this is so up. So I was expecting a bit of insight and a more pointed argument on why this is "neutral" even though the author's investment strategy may be different. Everyone is referring to Green energy around the world. We can directionally say that Joe Biden has called for renewable energy. So from that point of view, any clean energy index should be moving up. And, that's a layman's pov. Maybe some additional comments on why another ETF may be better in a specific way. For example, this fund doesn't have any wind energy- which should be considered as part of green energy as well.
Retired Investor profile picture
@anon077 I’m Neutral because of the run up you mentioned and expected some pull back unless the GOP looses both GA senate race. The underlying index says there is Wind exposure but without reviewing each company, I cannot say what that exposure is. Comparing QCLN vs FAN, it shows QCLN has two Wind companies and they represent about 1% of the QCLN AUM. Until the index changes, I would say someone wanting more wind exposure needs to add $FAN ETF to their portfolio.
Thanks for the comment. Makes sense. How long do you think normally the position that you take is valid? Till the senate seat is final or 5 months or a year or changes made to the index. I ( as a layman) do expect some pullback, but in my naive way, I think it will keep on going ( a slightly more pace in the short term ( 1-2 year ) than a very broad index which is tracking the whole market.
Retired Investor profile picture
@anon077 Considering it’s up 16% since publication, not sure I’m the best person (non-professional investor) to ask about its future movement. If I remember right, changes might happen quarterly so I wouldn’t base investing on possible index changes. Long run, renewable funds should do well. You might take a deeper look at the five largest holdings to decide if QCLN makes sense to add to your portfolio. I have exposure somewhat via my ESG funds.
JSherman08 profile picture
Just wondering if anyone could give some info on EV battery stocks. Good, Bad and Ugly?
Retired Investor profile picture
@JSherman08 Sorry, not my area of expertise. Maybe a reader can chime in. If you are looking for a listing of companies, review the index list above.
JSherman08 profile picture
@Retired Investor thank you and no problem

@JSherman08 LIT & BATT are two great lithium battery ETFs

Retired Investor profile picture
Author’s note: My apology for leaving out this important data about country allocation

United States 79.63%

China 14.18%

Canada 3.69%

United Kingdom 1.64%

Chile 0.86
thumbsoup profile picture
$NIO is not a U.S. company. I get that its included because of the Nasdaq listing, but thats a Chinese company at almost 12% of this fund.
Retired Investor profile picture
@thumbsoup I see it listed as a ADR, which confirms it is not a US company. On that we agree, but the article doesn’t say it is but I noticed my country allocation chart is missing, very critical. QCLN is 80% US whereas most of the others are under 50% if my memory is correct. So NIO being Chinese would be part of the non-US allocation. Thanks for the comment.
garkster profile picture
Invesco fact sheet shows PBW as ~75% US.

On another note, I'm starting to think that these fund companies are getting a bit greedy. 60 bps, or more, for index-based funds holding US-listed equities seems high, especially when iShares is willing to do it for 45 bps in this case for a fund that holds foreign equities.

Invesco, First Trust, VanEck are all large enough to achieve economies of scale and leave some more yield on the table for us poor investors.
Retired Investor profile picture
@garkster True. ICLN and others are more INTL focused. PBW was recently covered so I choose to cover this one. As for fees, it will be interesting to see how those change as the industry consolidates.
thumbsoup profile picture
Buy the rumor, sell the news? Biden won, and his platform calls for stimulus/investment in green energy companies. Price is already high. Is the remaining chance for a big jump in price the size of government stimulus? If so, that probably turns on whether Senate is controlled by Republicans or Democrats, as Author noted.

Seems to me this is a bet on Senate control before the moment in January when the special election results are announced. Otherwise, the professionals/algorithms will beat you to it.

OTOH, little downside risk of $QCLN price falling much? Theme is directionally correct.

Biden energy and climate plan:

Gop only needs one seat for majority? What are you

Talking about two seats
Retired Investor profile picture
@shropsla21 My Bad. By holding the NC and AK seats, they will only need one from GA but that leaves no room for a GOP seat switching which has happened or one dies from a state with a DEM governor. All that said, thanks for reading and pointing out the math error on my part.
Michael Fitzsimmons profile picture
Nice work RI ... and I appreciate the shout-out on my PBW article. GLTY!
Retired Investor profile picture
@Michael Fitzsimmons Always wondered if Contributors were notified. I think it helps all our readers when we can include others work in the same sector.
Michael Fitzsimmons profile picture
100% - and I appreciate it.
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