Renewable energy combines the energy of the sun, wind, water, and geothermal sources, as well as energy from “renewable organic matter from plants and animals”. In 2020, the highest energy sources in the United States were: (35%), (34%), renewables (12%), (10%) and nuclear (9%).
The International Energy Agency (IEA) asserts:
“Electricity production from renewable sources will grow in 2021 by more than 8%… Two-thirds of this growth will be driven by solar and wind energy.”
China is the largest shareholder. It is followed by the United States, Japan, the United Kingdom, India and Germany. In fact, more than a third of all growth over the next five years is likely to come from China. Readers may be interested to know in 2018 an Apple (NASDAQ:) has launched an investment fund in China to convert suppliers to renewable energy. Over the coming years, they plan to jointly invest about $300 million in the China Clean Energy Fund.
Meanwhile, the Biden administration is pushing the green energy agenda. Analysts also note that the cost of renewable energy is declining as production capacity expands worldwide.
Given the favorable economic background, the share of alternative sources in the energy industry will continue to grow, which will increase the investment community’s interest in related companies that have developed successful business models.
Today, we’ll take a look at a couple of ETFs that specialize in renewable energy.
1. iShares Global Clean Energy ETF
- price: USD 22.87
- Annual trading range: $13.95 – $34.25;
- profit return: 0.67%;
- investment costs: 0.42%.
iShares Global Energy ETF (NASDAQ :), which debuted in June 2008, invests in renewable energy providers.
The ICLN portfolio includes 85 components of the S&P Global Clean Energy Index.
The majority of the fund’s assets (38.36%) are from the USA. Below are the Danish companies (15.01%), China (7.01%) and Canada (6.446%). By sector, the capital is distributed among the energy industry (35.97%), heavy electrical equipment (14.83%), semiconductor equipment (13.72%) and renewable electricity (13.76%).
The fund’s net assets are estimated at $6.1 billion, with more than 47% of that amount invested in the top 10 investments. List heading Vistas Wind Systems (OTC :), Ørsted (OTC :), Energy Enphase (NASDAQ :), Nextera Energy (NYSE 🙂 and Excel Energy (NASDAQ:).
Since the beginning of the year, the ICLN rate is down 29%, but over the past 52 weeks it has increased by 55%; The highest level was recorded in January. The moving P/E and P/B ratios are 25.72 and 2.98, respectively. Market participants looking to invest in green energy may consider buying at current levels.
2. VanEck Vectors Low Carbon Energy ETF
- price: $157.56;
- Annual trading range: 91.72 – 195.55 USD;
- profit return: 0.06%;
- investment costs: 0.62%.
VanEck Vectors Low Carbon Energy ETF (NYSE:) also invests in global alternative energy companies.
SMOG now works with the securities of 71 index representatives. Regarding the geographical distribution of assets, the largest share is in the United States (31.22%); It is followed by China (20.33%), Denmark (9.70%) and Italy (7.14%).
The main sectors of the fund are utilities (35.0%), consumer sector (25.8%) and industry (22.4%). Approximately 55% of the funds, amounting to $304.1 million, are invested in stocks of the 10 largest assets.
The share of electric car manufacturers in the face of Tesla (NASDAQ :), New (NYSE :), LiAuto (NASDAQ 🙂 and Exping (NYSE: more than 22%. This means that short-term fluctuations in the shares of these giants will affect the dynamics of the fund itself.
SMOG has investments in a number of ICLN-owned companies, including Nextera Energy, Vestas Wind Systems and Orsted.
Since the beginning of the year, SMOG is down about 5%, but growth over the past 12 months has been 68%, with a record peak set in January. The moving P/E and P/B ratios are 37.18 and 4.11, respectively. Readers who are following the transition from conventional to renewable energy sources may want to consider purchasing SMOG on the downturn.
NB: The assets presented in this article may not be available to investors in some regions. In this case, consult a certified broker or a financial advisor who will help you choose a similar tool. The article is for informational purposes only. Before making an investment decision, be sure to conduct additional analysis.