While climate change has always been a grave issue, the cleantech industry has gained pace only in the last few months. There is no specific definition of cleantech, but this industry consists of companies that are working on renewable energy sources like solar, wind, low-carbon fuels, and more. According to the United States Energy Information Administration’s (EIA) Monthly Energy Review, U.S. renewable energy consumption surpassed coal for the first time in over 130 years.
This growth can also be attributed to the declining costs for storing renewable energies, which was a huge barrier earlier. In fact, according to the BloombergNEF (BNEF), Solar Photovoltaic (PV) and onshore wind became the cheapest sources of new-build generation for at least two-thirds of the global population. Under President-elect Joe Biden, the cleantech industry is expected to receive a boost as he had outlined a $2 trillion climate proposal that would make the U.S. power sector carbon free by 2035.
While it could be risky to bet on individual stocks with rising market uncertainty, investing in ETFs that offer exposure to an array of cleantech stocks could lower the risk. So it could be wise to bet on KraneShares Electric Vehicles and Future Mobility Index ETF (KARS), ALPS Clean Energy ETF (ACES), and First Trust Global Wind Energy ETF (FAN), which are poised to make new highs in the near future.
KraneShares Electric Vehicles and Future Mobility Index ETF (KARS)
KARS primarily focuses on companies engaged in the production of electric vehicles or their components. With an AUM of $48.3 million, selected stocks are sorted into tiers by market capitalization. NIO Inc. (NIO) making up for 4.21% of the fund is the top holding, followed by Daimler AG (DAI) at 3.39%, and Analog Devices, Inc. (ADI) at 3.38%.
KARS’ expense ratio of 0.70% compares to the category average of 0.52%. It has returned 68.3% over the past six months, and 61.9%, year-to-date. It pays an annual dividend of $0.44, which yields 1.2% on the prevailing price. Its average four-year dividend yield stands at 0.97%.
KARS has gained nearly 137.6% since hitting its 52-week low of $15.40 in March. The ETF is currently trading just 0.2% below its 52-week high of $38.21.
It’s no surprise that KARS is rated a “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade and a “B” for Industry Rank. In the Global Equities ETFs group, it is ranked #35.
ALPS Clean Energy ETF (ACES)
ACES follows the CIBC Atlas Clean Energy Index. The index is comprised of US and Canadian companies that are involved in clean energy, including renewables and clean technology. With assets under management (AUM) of $557 million, its top holding Plug Power, Inc. (PLUG) makes up 7.93% of the fund, followed by Enphase Energy, Inc. (ENPH) at 7.18% and Sunrun Inc. (RUN) at 7%.
ACES’ expense ratio of 0.65% compares to the category average of 0.63%. It has returned more than 97% over the past six months, and 103.4% year-to-date. It pays an annual dividend of $0.51, which yields 0.74% on the prevailing price. ACES’ four-year average dividend yield is 1.5%.
ACES has gained 167.3% since hitting its 52-week low of $23.16 in mid-March. The ETF reached its 52-week high of $68.67 yesterday.
How does ACES stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
A for Overall POWR Rating
It is also ranked #7 out of 37 ETFs in the Energy Equities ETFs group.
First Trust Global Wind Energy ETF (FAN)
FAN is the only global renewable energy ETF that targets the wind industry. Based on the price and yield of the ISE Global Wind Energy Index, FAN saves roughly 60% of its weighting for ‘pure-plays’ in the wind industry and allocates the remaining 40% to ‘diversified sector’ companies involved in the cleantech industry. The fund has AUM of $297.6 million. Its top holdings include Vestas Wind Systems A/S (VWS), which makes up 8.90% of the fund, Orsted (ORSTED) at 8.75% and Siemens Gamesa Renewable Energy, S.A. (SGRE) with a 8.49% weighting.
FAN has an expense ratio of 0.62% compared to the category average of 0.63%. It has returned 57.4% in the last six months, and 38.9% year-to-date. FAN pays $0.27 annually as dividends to its investors, which yields 1.34%. Its average four-year dividend yield stands at 3.4%.
FAN has gained 91.9% since hitting its 52-week low of $10.17 in March. The ETF is currently trading just 0.6% below its 52-week high of $20.46, which it hit on November 23rd.
FAN’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade and Buy & Hold Grade and a “B” for Peer Grade and Industry Rank. Among the 107-ETF Global Equities ETFs group, it’s ranked #15.
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KARS shares were trading at $38.50 per share on Tuesday afternoon, up $0.35 (+0.92%). Year-to-date, KARS has gained 63.41%, versus a 14.44% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...
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