Roughly four and a half months into 2026, it’s widely known that the energy sector is the best-performing group in the S&P 500. The war in Iran is playing a big part in that movie, as higher oil prices are propelling an array of fossil fuels stocks. Don’t leave clean energy equities and ETFs such as the ALPS Clean Energy ETF (ACES ) off the invite list. ACES is up more than 18% year-to-date, confirming that the old trend of high oil prices serving as a catalyst for renewable energy stocks is alive and well.
A recent by climate research group Zero Carbon Analytics (ZCA) confirms that the war in Iran, which forced the closure of the Strait of Hormuz — a major passageway for oil — is raising global concerns about energy security. When that happens, governments often revisit renewables, such as wind and solar, providing ballast to the ACES thesis.
Read more: Power Up Your Portfolio in Electrification ETF ELFY
ACES Catching a Wartime Bid
No, ACES isn’t an aerospace and defense ETF — the typical type of ETF investors lean into during geopolitical unrest — and that’s a good thing. Defense ETFs are largely disappointing investors since the war in Iran started. Conversely, ETFs such as ACES are benefiting.
That doesn’t necessarily make ACES a wartime ETF in the strictest sense of the term, but market participants are clearly renewing their enthusiasm for clean energy ETFs. Funds such as ACES hauled in $3 billion in fresh cash last month, good for the best month of inflows in more than four years, according to Morningstar data.
“Sentiment towards natural gas has also shifted, with 54 per cent of respondents saying investment in the sector is necessary to the energy transition, compared with 62 per cent a year earlier,” according to SustainableViews. “ZCA suggests clean energy momentum indicators are showing up in public policy, given that at least 23 countries have announced clean energy or electrification actions since the Iran war began.”
ACES’ ties to trends such as broader electric vehicle (EV) adoption and more homeowners embracing solar energy as protection against rising fossil fuels prices. Those are durable trends that could potentially augur well for ACES over the short- and long-term.
“There are already signs that demand for clean-energy products is rising. Early data on exports and sales of solar energy products, batteries to store clean energy, and electric vehicles show that consumers are going green—not just for the environment but also to protect themselves from high prices,” reported Avi Salzman for Barron’s.
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