Clean energy was one of the stellar performers in 2020 and that strength should continue through the new year, especially with an incoming Joe Biden presidency that can bring favorable policies to the sector. A pair of funds that can bring green, energy, and profits, to investors are the Invesco Solar ETF (TAN ) and the Invesco WilderHill Clean Energy ETF (PBW ).
Both TAN and PBW were recently featured in a Financial Times article. Given that both funds posted gains of over 200% within the past year, it’s easy to see why.
TAN, which started back in 2008, seeks to track the investment results of the MAC Global Solar Energy Index, which is designed to provide exposure to companies listed on exchanges in developed markets that derive a significant amount of their revenues from the following business segments of the solar industry: solar power equipment producers including ancillary or enabling products.
“The Invesco Solar exchange traded fund, which has $3.7bn in assets, had risen 238 percent since the start of the year as of Christmas Eve, topping a league table of US ETFs and mutual funds that invest in equities, as compiled by Morningstar,” the FT article said. “Among the ETF’s top holdings are two providers of residential solar power, Enphase Energy, which has risen almost 600 percent in value, and Sunrun, which is up 400 percent.”
PBW seeks to track the investment results of the WilderHill Clean Energy Index. The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index.
“The second-best performing fund was the Invesco WilderHill Clean Energy ETF, which has returned 220 percent,” the article added. “One of its largest holdings is FuelCell Energy, which designs and makes power plants, whose shares have gained almost 400 percent this year.”
Broad, Active ESG Exposure
While clean energy can fall under the umbrella of the popular environmental, social, and governance (ESG) space, ETF investors looking to get this more broad exposure can look to a fund like the relatively new *Invesco US Large Cap Core ESG ETF (IVLC). IVLC also offers investors an active management component at an expense ratio of 0.48%.
IVLC will primarily invest at least 80% of its total assets in exchange-traded equity securities of U.S. large capitalization issuers. The Fund seeks to achieve its investment objective by investing mainly in the common stock of U.S. companies that meet high environmental, social, and governance (“ESG”) standards.