5 Top Clean Energy ETFs By Market Performance

Table of Сontents

1. What Are Clean Energy ETFs?
2. How to Evaluate Clean Energy ETFs
3. 5 Best Performing Clean Energy ETFs
4. Bottom Line

Through January 31, 2022, we showcase the top 5 clean energy ETFs based on 1-year performance. Learn more about the holdings, costs, and performance over the short and long term of ETFs.

What Are Clean Energy ETFs?

Exchange-traded funds, or ETFs, that focus on renewable energy sources like wind and solar provide investors exposure to these businesses. Even while these ETFs have the option of active management, the majority of them aim to passively follow the performance of a benchmark index, such as the S&P Global Clean Energy Index.

There are now 15 U.S.-traded renewable energy ETFs available. With $4.8 billion in assets under management, iShares Global Clean Energy ETF (ICLN) is the largest energy ETF in this energy subsector. Clean energy ETFs are sometimes chosen by investors as an alternative to existing energy sector ETFs or as a component of an ESG investment strategy.

Advice: Market expansion for renewable energy has been tremendous in recent years and demonstrates

How to Evaluate Clean Energy ETFs

As of January 31, 2022, the trailing 1-year return is used to rank our best clean energy ETFs. Investors would be advised to look at more factors when evaluating ETFs than just short-term success, such as long-term returns, expense ratio, holdings, and ratings.

The following criteria were used to rank the top clean energy ETFs:

• Performance: The performance of our top clean energy ETFs is judged mostly on the basis of their 1-year return. ETFs that were introduced to the market less than a year ago were thus disregarded. Before contemplating the purchase of an ETF, investors would be advised to evaluate lengthier historical performance, such as 3-, 5-, and 10-year returns.
• Expenses: ETFs in the same category frequently track the same or a comparable index, thus the one with the lowest expense ratio will typically beat those with higher expenditures. This makes a fund’s expense ratio, or the cost of holding the ETF, a significant factor to consider.
• Structure: In a contrast to closed-end funds, or CEFs, most exchange-traded funds, or ETFs, are set up as open-ended investment businesses. A grantor trust, a limited partnership, or an ETN is more examples of ETF structures.
• Objective: Our selection only included ETFs that primarily invest in renewable energy equities. Both actively managed and passively managed funds might compete in the quest for the best clean energy ETFs. Alternative goals and tactics, such as leveraged and inverse ETFs, weren’t taken into consideration for this list.
• Portfolio holdings: Stocks of businesses engaged in the production of renewable energy, including solar, wind, geothermal, and hydroelectric power, are frequently held by clean energy ETFs.
• Quant Ratings and Factor Grades: The Quant Ratings and Factor Grades provided by Seeking Alpha can be used to assess individual stocks or ETFs. We discuss “Factor Grades” in this article, which provides letter grades to five different “factors”: momentum, expenses, dividends, risk, and asset flows. Seeking Alpha does this by contrasting the pertinent parameters for the factor with the comparable metrics for the other ETFs in the same asset class. The factor grades range from an A+ on through to an F on the lowest scale.

5 Best Performing Clean Energy ETFs

We evaluate the top 1-year returns through January 31, 2022, to compile our ranking of the top clean energy ETFs for 2022. Investors should remember that previous performance is no guarantee of future outcomes and that returns over longer time periods, such as three, five, and ten years, are crucial to analyze.

1. First Trust Global Wind ETF

An exchange-traded fund called First Trust Global Wind ETF (FAN) aims to replicate the investment performance of the ISE Clean Edge Global Wind Energy Index. This index is intended to assess the performance of publicly traded businesses operating in the wind energy sector globally.

• As of date: January 31, 2022
• 1-year Performance: -19.16
• Expense Ratio: 0.60%, or $60 annually for every $10,000 invested
• 30-Day SEC Yield: 1.39
• Average Daily Volume: 113,918

First Trust Global Wind ETF Performance

In terms of 1-year NAV performance, the First Trust Global Wind ETF was able to outperform its benchmark, although it lagged behind its index throughout all other time periods examined. For a fund that passively tracks its benchmark, this performance is typical. Through January 31, 2022, FAN underperformed the S&P 500 in all periods examined.

As of January 31, 2022, $10,000 invested in the SMH ETF one year, three years, five years, and ten years ago would be worth:

• 1 year ago: $8,084
• 3 years ago: $15,528
• 5 years ago: $17,218
• 10 years ago: $29,092

First Trust Global Wind ETF Structure, Objective, and Holdings

• Inception Date: 06/16/2008
• Issuer: First Trust Advisors L.P.
• Ticker: FAN
• Primary Exchange: NYSE Arca
• Structure: Open Ended Investment Company
• Objective: Seeks to replicate as closely as possible the performance of the ISE Clean Edge Global Wind Energy Index.

FAN ETF Top 10 Holdings, as of January 31, 2022

1. China Longyuan Power Group Corporation Limited (OTCPK: CLPXF)
2. Northland Power Inc (OTCPK: NPIFF)
3. Orsted A/S (OTCPK: DNNGY)
4. Vestas Wind Systems A/S (OTCPK: VWDRY)
5. Siemens Gamesa Renewable Energy, SA (OTCPK: GCTAF)
6. EDP Renovaveis SA (OTCPK:EDRVF)
7. Boralex Inc. (OTCPK:BRLXF)
8. Engie S.A. (OTCPK: ENGIY)
9. RWE AG (OTCPK: RWEOY)
10. SSE Plc (OTCPK:SSEZY)

FAN ETF Seeking Alpha Quant Ratings

2. VanEck Low Carbon Energy ETF

The MVIS Global Low Carbon Energy Index’s price and yield performance are closely replicated by the VanEck Low Carbon Energy ETF (SMOG). Renewable energy sectors including wind, solar, hydro, and electronic vehicle manufacturing are included in the index, although they are not the only ones.

• As of date: January 31, 2022
• 1-year Performance: -21.45
• Expense Ratio: 0.50%, or $50 annually for every $10,000 invested
• 30-Day SEC Yield: 1.27
• Average Daily Volume: 6,158

VanEck Low Carbon Energy ETF Performance

For the 1-year NAV, the VanEck Low Carbon Energy ETF marginally beat its benchmark while closely tracking somewhat behind the index for all other time periods. Through January 31, 2022, SMOG also underperformed the S&P 500 for the 1- and 10-year returns, but it dramatically exceeded the S&P 500 for the 3- and 5-year returns.

As of January 31, 2022, $10,000 invested in SMOG one year, three years, five years, and ten years ago would be worth:

• 1 year ago: $7,855
• 3 years ago: $22,600
• 5 years ago: $26,565
• 10 years ago: $41,776

VanEck Low Carbon Energy ETF Structure, Objective, and Holdings

• Inception Date: 05/03/2007
• Issuer: Van Eck Associates Corporation
• Ticker: SMOG
• Primary Exchange: NYSE Arca
• Structure: Open Ended Investment Company
• Objective: Seeks to replicate as closely as possible the price and yield performance of the MVIS Global Low Carbon Energy Index.

SMOG ETF Top 10 Holdings, as of January 31, 2022

1. Iberdrola SA (OTCPK:IBDRY)
2. Tesla Inc (TSLA)
3. Nextera Energy Inc (NEE)
4. Enel Spa (OTCPK: ENLAY)
5. Nio Inc (NIO)
6. Vestas Wind Systems A/S (OTCPK: VWDRY)
7. Samsung Sdi Co Ltd (OTCPK: SSDIY)
8. Orsted AS
9. Xpeng Inc (XPEV)
10. Lucid Group Inc (LCID)

SMOG ETF Seeking Alpha Quant Ratings

3. First Trust Nasdaq Clean Edge Green Energy ETF

A passively managed exchange-traded fund, First Trust Nasdaq Clean Edge Green Energy Index ETF (QCLN), pursues investment outcomes that broadly track the Nasdaq Clean Edge Green Energy Index. The index comprises sectors related to clean energy, including those for solar, wind, high-tech batteries, fuel cells, and electric cars.

• As of date: January 31, 2022
• 1-year Performance: -28.39
• Expense Ratio: 0.60%, or $60 annually for every $10,000 invested
• 30-Day SEC Yield: —
• Average Daily Volume: 363,373

First Trust Nasdaq Clean Edge Green Energy ETF Performance

Being a passively managed vehicle, First Trust Nasdaq Clean Edge Green Energy ETF performs closely behind its benchmark. Through January 31, 2022, QCLN outperformed the S&P 500 index by a wide margin across the 1-, 3-, 5-, and 10-year returns.

As of January 31, 2022, $10,000 invested in the QCLN ETF one year, three years, five years, and ten years ago would be worth:

• 1 year ago: $7,161
• 3 years ago: $30,566
• 5 years ago: $37,201
• 10 years ago: $57,139

QCLN ETF Structure, Objective, and Holdings

• Inception Date: 02/08/2007
• Issuer: First Trust Advisors L.P.
• Ticker: QCLN
• Primary Exchange: Nasdaq
• Structure: Open Ended Investment Company
• Objective: Seeks investment results that correspond generally to the price and yield of the Nasdaq Clean Edge Green Energy Index.

QCLN ETF Top 10 Holdings, as of January 31, 2022

1. ON Semiconductor Corporation (ON)
2. Tesla, Inc. (TSLA)
3. Albemarle Corporation (ALB)
4. NIO Inc. ADR (NIO)
5. Enphase Energy, Inc. (ENPH)
6. SolarEdge Technologies, Inc. (SEDG)
7. Wolfspeed, Inc. (WOLF)
8. XPeng Inc. ADR (XPEV)
9. Brookfield Renewable Partners LP (BEP)
10. Plug Power Inc. (PLUG)

QCLN ETF Seeking Alpha Quant Ratings

4. iShares Global Clean Energy ETF

According to assets under management, the largest clean energy ETF is iShares Global Clean Energy ETF (ICLN). The fund aims to follow the performance of an index made up of international renewable energy stocks. Companies that generate energy from solar, wind, and other renewable sources make up the majority of ICLN.

• As of date: January 31, 2022
• 1-year Performance: -36.50
• Expense Ratio: 0.42%, or $42 annually for every $10,000 invested
• 30-Day SEC Yield: 1.20
• Average Daily Volume: 4,888,020

iShares Global Clean Energy ETF Performance

The performance of the iShares Global Clean Energy ETF closely mirrors that of its benchmark index. Through January 31, 2022, ICLN strongly exceeded the S&P 500 in the 3- and 5-year returns but dramatically underperformed the S&P 500 in the 1- and 10-year returns.

As of January 31, 2022, $10,000 invested in the ICLN ETF one year, three years, five years, and ten years ago would be worth:

• 1 year ago: $6,350
• 3 years ago: $20,464
• 5 years ago: $24,718
• 10 years ago: $25,239

iShares Global Clean Energy ETF Structure, Objective, and Holdings

• Inception Date: 06/24/2008
• Issuer: Blackrock Fund Advisors
• Ticker: ICLN
• Primary Exchange: Nasdaq
• Structure: Open Ended Investment Company
• Objective: Seeks to track the investment results of an index composed of global equities in the clean energy sector.

ICLN ETF Top 10 Holdings, as of January 31, 2022

1. Vestas Wind Systems (OTCPK: VWDRY)
2. Enphase Energy Inc (ENPH)
3. Consolidated Edison Inc (ED)
4. Orsted (OTCPK: DNNGY)
5. Solaredge Technologies Inc (SEDG)
6. Plug Power Inc (PLUG)
7. SSE PLC (OTCPK:SSEZF)
8. Iberdrola S.A. (OTCPK:IBDSF)
9. EDP Energias De Portugal S.A (OTCPK:EDPFY)
10. Xinyi Solar Holdings Ltd (OTCPK: XISHY)

ICLN ETF Seeking Alpha Quant Ratings

5. SPDR S&P Kensho Clean Power ETF

The SPDR S&P Kensho Clean Power ETF (CNRG) is an exchange-traded fund that aims to follow an index of cutting-edge businesses in the clean energy industry, including solar, wind, geothermal, and hydroelectric power, in the United States and throughout the world.

• As of date: January 31, 2022
• 1-year Performance: -38.03
• Expense Ratio: 0.45%, or $45 annually for every $10,000 invested
• 30-Day SEC Yield: 1.39
• Average Daily Volume: 58,726

SPDR S&P Kensho Clean Power ETF Performance

For all of the periods examined, the SPDR S&P Kensho Clean Power ETF closely followed its benchmark. The CNRG ETF dramatically underperformed the S&P 500 Index for the 1-year return while outperforming it for the 3-year return as of January 31, 2022. CNRG does not have a track record for performance beyond three years.

As of January 31, 2022, $10,000 invested in the CNRG ETF 1 year and 3 years ago would be worth:

• 1 year ago: $6,197
• 3 years ago: $25,221

SPDR S&P Kensho Clean Power ETF Structure, Objective, and Holdings

• Inception Date: 10/19/2018
• Issuer: SSGA Funds Management
• Ticker: CNRG
• Primary Exchange: NYSE Arca
• Structure: Open Ended Investment Company
• Objective: Seeks to track an index of innovative companies in the U.S. and around the globe that are in the clean energy sector.

CNRG ETF Top 10 Holdings, as of February 17, 2022

1. Enbridge Inc. (ENB)
2. New Jersey Resources Corporation (NJR)
3. General Electric Company (GE)
4. Algonquin Power & Utilities Corp. (AQN)
5. Consolidated Edison Inc. (ED)
6. ReneSola Ltd. Sponsored ADR (SOL)
7. ALLETE Inc. (ALE)
8. Centrais Eletricas Brasileiras SA-Eletrobras Sponsored ADR (OTC:CEDWF)
9. JinkoSolar Holding Co. Ltd. Sponsored ADR (JKS)
10. Avangrid Inc. (AGR)

CNRG ETF Seeking Alpha Quant Ratings

Bottom Line

Investors may gain wide exposure to businesses in the renewable resources sector, including those involved in wind, solar, hydro, and electric cars, by using clean energy ETFs. High long-term returns have been generated by clean energy companies, but the market risk for this energy sub-sector is typically higher than that of wider market indices like the S&P 500.