Clean energy stocks gaining traction as COP26 kicks off: Sector Watch

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• The two-week COP26 climate summit is underway today in Glasgow, Scotland and the team at DataTrek is looking at clean energy fund holdings that will get more attention.
• They look at the top three clean energy ETFs with at least $1B assets under management.
• "Alt energy has significantly lagged the S&P 500 year-to-date, but has meaningfully outperformed over the last month," DataTrek founders Nicholas Colas and Jessica Rabe write.
• The iShares S&P Global Clean Energy ETF (NASDAQ:ICLN) is down 13.4%, but up 9.1% in the last month.
• Its top holdings in order are Vestas Wind System (OTCPK:VWDRY), Enphase Energy (NASDAQ:ENPH), Orsted (OTCPK:DNNGY), ConEd (NYSE:ED) and Plug Power (NASDAQ:PLUG).
• The Invesco Solar ETF (NYSEARCA:TAN) is down 8.3% year to date and up 14.8% in the last month.
• It has the biggest holding in SolarEdge Technologies (NASDAQ:SEDG) at 11%, followed by Enphase, First Solar, Xinyi Solar and Daqo New Energy (NYSE:DQ).
• The First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN) is up 3.4% year to date and up 11.5% in the last month.
• Tesla (NASDAQ:TSLA) is the top holding at 10.3%, followed by NIO (NYSE:NIO), Albemarle (NYSE:ALB), Enphase and ON Semi (NASDAQ:ON).
• "The 3 alt-energy ETFs we covered hit their all-time highs in January and February of 2021 amid hopes of Federal government support of clean energy by the then-newly installed Biden administration," DataTrek says. "That enthusiasm waned soon thereafter with a largely do nothing Congress on the issue of clean energy and a myriad of issues on the President’s agenda."
• "Nevertheless, recent performance has shown clean energy has piqued investors’ interest again, so this upcoming climate conference will set an important tone for this investment theme going forward."
• The big winner in President Joe Biden's Build Back Better legislation framework released is clean energy, Goldman Sachs said this week.
• Clean energy "appears to get a similar amount of tax benefits and spending as it would have in House-proposed legislation, despite the framework's much smaller overall cost," Goldman's Jan Hatzius writes.
• "Notably, most of the clean energy provisions appear to last for 10 years in the framework, while nearly every other proposal would last for a shorter period than previously proposed," Hatzius says.
• The "clean energy space works best when there are highly visible political catalysts," DataTrek concludes. "COP26 certainly qualifies, but to be longer-run bullish on clean energy stocks requires a belief that US government spending in this area will continue to increase, and materially so."
• "At present, with a narrowly split House and a midterm election in a year’s time, that is a hard investment case to make in our view."
• Ahead of the summit, BofA picks its top stocks for COP26.