Best renewable energy ETFs: Our analysis of the landscape

Zach Stein

If you are looking for the best renewable energy ETF to invest in, here is the full list you can choose from (as of 09/25/20). We go over what stood out to us for each fund and group them together based upon their investment philosophies. 

We built Carbon Collective because we were looking for the best ways to align our financial and ethical goals around climate change. In the process we’ve seriously “kicked the tires” of every possible way you can invest in renewable energy as an individual. 

One of the easiest ways is to let someone else do the hard parts. Sifting through all of the renewable energy stocks out there can be daunting. While it costs more, buying an ETF makes it easy because a fund manager is doing all of the selection for you. You just need to choose which fund to buy. 

(Note that in our breakdown of clean energy ETFs we also include nuclear energy.) 

Disclaimer:  We’re publishing all of the following purely for informational purposes and not a recommendation to buy or sell any individual stock, bond, or fund. 

ETFs

An ETF or Exchange Traded Fund is a collection of stocks and/or bonds that a fund manager selects. Unlike a mutual fund, ETFs are generally “passively” managed, meaning the fund managers infrequently buy or sell stocks within the fund. ETFs are a great option for long term, “buy and hold” investors as they generally have much lower fees than mutual funds and are more tax efficient.

Here’s the full breakdown of renewable energy ETFs.

Renewable energy ETFs

These ETFs invest in the companies that design, manufacture, and deploy renewable energy generation technology. They define renewable energy to include: wind, solar, hydro, geothermal, biomass, biodiesel, and ethanol.

Do note that at Carbon Collective, we are wary about ethanol. The debate is still unclear on whether it is more carbon efficient overall than gasoline when you look at the fossil fuels used to grow corn.

  • COMPANY
  • TICKER
  • % CHANGE (3-YR)
  • % CHANGE (5-YR)
  • DESCRIPTION
% CHANGE (3-YR)
+23.69 %
% CHANGE (5-YR)
+15.41 %

ICLN's high AUM and low(er) fees make it a good option if you don't have time for deeper research. It invests in companies building & deploying renewable energy around the world. AUM = $1.3B. Fee = 0.46%

% CHANGE (3-YR)
N/A
% CHANGE (5-YR)
N/A

If you want to invest in the technology behind renewable energy, CNRG is a good option. It does not invest directly in power generation, but the companies innovating & manufacturing in the space. While its AUM is low, it does have low fees for the sector. AUM = $52.6M. Fee = 0.45%

% CHANGE (3-YR)
+7.73 %
% CHANGE (5-YR)
+10.56 %

If you want to directly invest in solar, wind, and battery farms, Yieldcos are your best option. YLCO invests both in global Yieldcos & companies that generate 50% of their revenue from renewable energy. AUM = $52.3M. Fee = 0.65%.

Renewable energy + decarbonization ETFs

If you want to invest even more broadly in renewable energy, checkout these ETFs. They include some of the technologies that are pushing the transition to a zero carbon economy. They will invest your savings not just in wind and solar, but in electric cars, batteries, LEDs, and fuel cells.

If you want to learn more about decarbonization, check out Dr. Saul Griffiths handbook for reaching carbon neutrality in the US.

  • COMPANY
  • TICKER
  • % CHANGE (3-YR)
  • % CHANGE (5-YR)
  • DESCRIPTION
% CHANGE (3-YR)
+34.40 %
% CHANGE (5-YR)
+22.83 %

PBW includes both renewable energy and companies in related spaces like electric cars & batteries. It is heavily focused on the US (85%) and caps any company at 4% of the fund, giving you more exposure to smaller companies. AUM = $658M. Fee = 0.70%

% CHANGE (3-YR)
+28.19 %
% CHANGE (5-YR)
+23.35 %

QCLN is more focused on decarbonization. It still invests in renewable energy generation (wind/solar), but also: advanced materials, smart grid, & energy storage / hybrid conversion. Like PBW it focuses heavily on the US (83%). AUM = $474M. Fee = 0.60%

% CHANGE (3-YR)
N/A
% CHANGE (5-YR)
N/A

Like PBW and QCLN, ACES goes beyond renewable energy to focus on broader decarbonization. It includes electric cars, batteries, fuel cells, & smart grids as well as wind and solar. AUM = $358M. Fee = 0.65%

% CHANGE (3-YR)
+19.72 %
% CHANGE (5-YR)
+16.22 %

In order to be included in SMOG a company must make 50% of its revenue from renewable energy OR energy efficiency. SMOG has lower AUM & fees that are in line with the other decarbonization ETFs. AUM = $144M. Fee = 0.62%.

% CHANGE (3-YR)
+18.83 %
% CHANGE (5-YR)
+16.14 %

PBD is the closest to an "actively managed fund." It highlights companies the fund managers believe have "potential for capital appreciation." It's threshold for inclusion is low. Companies must derive >10% of their revenue from renewable energy. AUM = $99.2M. Fee = 0.75%.

Solar + wind only ETFs

If you want to invest in just the solar or wind energy industry, these two ETFs are your best (and only) options. Each invests in companies that are working just on solar or wind around the world. They have no overlapping holdings, so investing in both could make sense, as well.

  • COMPANY
  • TICKER
  • % CHANGE (3-YR)
  • % CHANGE (5-YR)
  • DESCRIPTION
Solar ETF
% CHANGE (3-YR)
+37.18 %
% CHANGE (5-YR)
+17.51 %

If you want to invest in just solar, TAN is your best option. It invests in companies around the world building and deploying solar technology. It favors companies for which solar is 100% of their business. It has relatively high fees but high AUM. AUM = $1.28B. Fee = 0.71%

Wind Energy ETF
% CHANGE (3-YR)
+11.02 %
% CHANGE (5-YR)
+13.99 %

If you want to invest specifically in wind-energy, FAN is your best (and only) ETF option. It's very focused in European markets with 60% going to companies who only do wind energy and 40% to companies who do wind but other things as well. AUM = $196M. Fee = 0.62%.

About Carbon Collective

We started Carbon Collective after we couldn’t find anywhere to invest our retirement savings that made both ethical and financial sense in the age of climate change.

So we built the world’s first series of climate-friendly, diversified, low-fee investment portfolios and teamed up with a world-class online brokerage platform to automatically manage them.

Imagine an index fund in a world without fossil fuels. That’s how we build our portfolios. We swap the high-carbon parts of the stock market (fossil fuels, dirty utilities, airlines, etc.) with the companies building solutions to climate change (renewable energy, circular economy, energy efficiency, etc.).

Check out their historical performance, carbon footprint, and fees compared to common standard and ethical portfolios.

Collectively, we can make a difference.

Join us!
Processing...
Thank you! Your subscription has been confirmed. You'll hear from us soon.
ErrorHere