With climate change becoming a pertinent issue, people all over the world are concerned about its effects. According to the World Health Organization, 9 out of 10 people worldwide breathe polluted air. Global sea level has risen by about 8 inches since 1880 and it is projected to rise further as a result of added water from rapid melting of ice on land and the expansion of seawater as it warms. Fortunately, many countries are taking action to prevent worsening conditions in the future.
Individuals and businesses alike are taking measures to transition towards a sustainable future. In fact, renewable energy could power the world by 2050. The Paris Agreement of 2015 was an important step towards this goal, bringing all nations into a common cause to undertake efforts to combat climate change. Even though the United States officially withdrew from the agreement on November 4th, President-elect Joe Biden has expressed his intent to re-join the Paris Agreement on his first day of office.
So, ‘green energy’ stocks are definitely expected to grow in the future. While it might be risky to bet on a single cleantech stock, ETFs with exposure in this space could be a less-risky option to gain from the impending changes. The Invesco WilderHill Clean Energy ETF (PBW), First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN), and KraneShares Electric Vehicles and Future Mobility Index ETF (KARS) should gain with the world striving toward a sustainable future with clean energy.
Invesco WilderHill Clean Energy ETF (PBW)
PBW primarily invests in companies that will substantially benefit from the world transitioning towards a sustainable future through cleaner energy and conservation. With Assets Under Management (AUM) of $1.1 billion, it’s a unique fund in the sense that it is heavy on tech stocks, spreading the rest of the exposure across other sectors. Its top holding is NIO Inc. (NIO) which makes up 4.29% of the fund, followed by SunPower Corporation (SPWR) with a 3.39% weighting and JinkoSolar Holding Company Limited (JKS), with a 3.37% weighting.
PBW’s expense ratio of 0.70% is a bit higher than the category average of 0.33%. It has returned 127.7% over the past six months, and 119% year-to-date. It pays an annual dividend of $0.19, which yields 0.26% on the prevailing price. ICLN’s four-year average dividend yield is 1.5%.
PBW has gained 225.5% since hitting its 52-week low of $22.20 in mid-March. The ETF is currently trading 5.4% below its 52-week high of $78.48.
How does PBW 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 #2 out of 36 ETFs in the Energy Equities ETFs group.
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
QCLN invests in the alternative energy industry. The fund, which has a wide depth and breadth in its holdings, not only invests in sectors making advanced batteries for the Electrical Vehicles (EVs) market, but also in companies focused on solar energy and biofuels, among others. The fund has AUM of $997.9 million. Its top holdings include NIO at 13.77%, Enphase Energy, Inc. (ENPH) at 7%, and Tesla, Inc. (TSLA) at 5.43%.
QCLN has an expense ratio of 0.60% compared to the category average of 0.52%. It has returned 116% in the last six months, and 121.9% year-to-date. QCLN pays a dividend of $0.17 annually, which yields 0.31%. Its average four-year dividend yield stands at 0.8%.
QCLN has gained more than 186% since hitting its 52-week low of $16.14 in mid-March. The ETF is currently trading 7.9% below its 52-week high of $59.75 which it hit on November 9th.
QCLN’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade and Peer Grade and a “B” for Buy & Hold Grade. Among the Energy Equities ETFs group, it’s ranked #9.
KraneShares Electric Vehicles and Future Mobility Index ETF (KARS)
As the name suggests, KARS is primarily focused on companies engaged in the production of electric vehicles or their components. With a narrow focus, the fund seeks to measure the performance of the Solactive Electric Vehicles and Future Mobility Index. It has AUM of 40.8 million. NIO is the top holding, with an allocation of 3.97%, followed by Alphabet Inc. (GOOGL) at 3.61%, and Analog Devices, Inc. (ADI) at 3.50%.
KARS’ expense ratio of 0.70% is a little higher than the category average of 0.52%. The ETF has returned 49.4% over the past six months, and 43.2%, year-to-date. It pays an annual dividend of $0.44, which yields 1.3% on the prevailing price. Its average four-year dividend yield stands at 1%.
KARS has gained nearly 112% since hitting its 52-week low of $15.40 in March. The ETF is currently trading 5.3% below its 52-week high of $35.85.
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 110-Global Equities ETFs group, it is ranked #35.
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PBW shares were trading at $75.02 per share on Friday afternoon, up $0.59 (+0.79%). Year-to-date, PBW has gained 120.55%, versus a 12.24% 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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