Best solar ETFs: Carbon Collective’s analysis of the investment landscape

Zach Stein

If you’re looking for the best solar ETFs, there’s only one to choose from: TAN. It’s the only ETF that is 100% focused on the solar industry. 

But perhaps you’re looking to invest in solar and the rest of renewable energy. This landscape of ETFs is larger and offers you more options. There are funds that are focused just on renewable energy and funds that go even further, including other decarbonization technology like batteries and electric cars. 

Check out the full list of ETFs that allow you to invest in the solar industry below (as of 09/25/20). If you’re looking for other ways to invest in solar, see our breakdown of the top six ways you can invest in renewable 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.

Solar ETF

  • COMPANY
  • TICKER
  • % CHANGE (3-YR)
  • % CHANGE (5-YR)
  • DESCRIPTION
% 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 & 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%

Renewable Energy ETFs

If you’re looking to invest in more than just solar, here’s the three ETFs you can buy today that focus completely on renewable energy, including solar, wind, hydro, biomass, geothermal, 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%.

Yieldcos

If you want to invest directly in helping renewable energy companies deploy faster, checkout Yieldcos. They are holding companies that help renewable energy companies raise money to build solar, wind, and battery farms. Once built, they return part of their consistent profits as dividends to investors.

These are individual stocks, not ETFs, but they are worth looking at.

  • COMPANY
  • TICKER
  • % CHANGE (3-YR)
  • % CHANGE (5-YR)
  • DESCRIPTION
% CHANGE (3-YR)
+97.82 %
% CHANGE (5-YR)
+171.52 %

BEPC owns 16+ GWs of production (~10.4m US households of electricity) globally. BEPC is a "Yieldco" which pools investments to buy renewable energy plants and return regular dividends.

% CHANGE (3-YR)
+50.89 %
% CHANGE (5-YR)
+102.98 %

Clearway owns 4.3+ GWs of production (~2.8m US households of electricity). Clearway is a "Yieldco" which pools investments to buy renewable energy plants and return regular dividends.

% CHANGE (3-YR)
+118.84 %
% CHANGE (5-YR)
+201.87 %

They own 2.3+ GWs of production (~1.5m US households of electricity). Hannon is a "Yieldco" which pools investments to buy renewable energy plants and return regular dividends.

% CHANGE (3-YR)
+58.56 %
% CHANGE (5-YR)
+149.09 %

NEP owns 5.3+ GWs of production (~3.4m US households of electricity). NEP is a "Yieldco" which pools investments to buy renewable energy plants and return regular dividends.

About Carbon Collective

We started Carbon Collective because 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 put together the world’s first series of climate-friendly, diversified, low-fee investment portfolios. We 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 construct our portfolios. We replace 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.

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