Table of Contents
What are the pros and cons of clean energy ETFs?
Where does an energy ETF primarily invest in?
How do I invest in clean energy ETFs?
Jul 27, 2022
4 min read
Clean energy ETFs offer a diversified fund of stocks in the green energy sector. If you’re thinking of investing in clean energy ETFs, it’s important to know the upsides, downsides, and potential risks.
Clean energy ETFs are pools of stocks from clean energy companies. Companies included in a green energy ETF can be from across the energy sector, focusing on production, emerging technology, or anything that intersects with alternative energy. You could invest in a solar exchange-traded fund, in funds that target emerging green technology, or funds that include traditional energy companies with a new focus on sustainability.
Clean energy ETFs operate like any other exchange-traded fund, but they focus specifically on investing in companies that produce sustainable energy.
Renewable energy ETFs are in the equity asset class. A green energy ETF can invest in various energy and technology sectors, such as solar or wind power.
If you’re thinking of investing in clean energy ETFs, it’s important to know the upsides, downsides, and potential risks.
Clean energy exchange-traded funds are all about investing in a better future for the planet. Unquestionably, clean energy will be a critical development in the future economy to address climate change and the growing need for renewable energy.
Invest in line with your values:
Care about Earth? If so, clean energy ETFs allow you to put your money to good use by investing in companies that share your beliefs. Doing so helps them grow and thrive, not to mention share their profits with you. Clean energy ETFs will also diversify your energy investments, as they allow you to invest in a combination of different energy stocks.
New initiatives could potentially boost energy companies’ success as climate change becomes a more present concern to global governments. For example, the implication of green initiatives could cause significant increases in value in stocks based on solar energy, electric vehicles, and wind energy.
Past and potential future volatility:
Like any investment, past performance of clean energy ETFs is not an indication of future results. There are no guarantees and investing requires an iron stomach for volatility.
A narrow investment sector: While ETFs diversify your financial portfolio, some argue the clean energy sector is limited, especially when compared to the entire energy sector, which includes oil and gas reserves and refining. As a whole, the energy sector has a variety of ETFs available. If you want to focus on clean energy exchange-traded funds specifically, you eliminate other energy ETFs that could help you achieve your financial objectives.
Chances are likely you can find energy ETFs that fit your objectives, investment style, and values. That’s because they invest in various companies across the energy sector (natural gas, wind, solar, electric vehicle, hydroelectric, biofuels, hydrogen, and geothermal stocks, to name just a few).
Here’s a list of energy ETFs and where the funds invest.
This fund tracks companies that utilize natural gas technology and production and has an expense ratio of 0.6%.
This fund follows the Dynamic Energy Exploration and Production Intellidex index. Focusing on companies that use natural resources for energy production, it invests in petroleum refineries, natural gas companies, and small-cap and mid-cap companies.
The First Trust Nasdaq Clean Energy ETF focuses on the First Trust NASDAQ Clean Edge Green Energy Index and invests in the clean energy industry as a whole.
This fund holds 112 stocks and is currently one of the largest clean energy ETFs in existence. The fund focuses on industrial technology that develops clean energy and utilities and has a low expense ratio of 0.46%.
This clean energy fund focuses on clean energy and conservation.
If you want to invest in clean energy and sustainability in general, this ETF invests widely in companies focusing on sustainability and clean energy stocks. The fund has an expense ratio of 0.58%.
There is no short answer where energy ETFs invest; some invest in companies that focus on production, others in new technology, and some in traditional energy companies that have just started to recognize the environmental importance and profitability of clean energy.
The primary way to invest in an ETF is with a brokerage account; typically, you add the funds you would like to invest and place your order through your broker. When investing in clean energy ETFs, you should consider many of the same things you would with any fund. Different energy ETFs will have different expense ratios, the number of assets under management, diversity, investment styles, and volatility.
At Titan, we are value investors: we aim to manage our portfolios with a steady focus on fundamentals and an eye on massive long-term growth potential. Investing with Titan is easy, transparent, and effective. Sign-up takes five minutes: get started today.
At Titan, we are value investors: we aim to manage our portfolios with a steady focus on fundamentals and an eye on massive long-term growth potential. Investing with Titan is easy, transparent, and effective.
Get started today.
Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Titan has not independently verified such information and makes no representations about the accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; Titan has not reviewed such advertisements and does not endorse any advertising content contained therein.
This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any strategy managed by Titan. Any investments referred to, or described are not representative of all investments in strategies managed by Titan, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results.
Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see Titan’s Legal Page for additional important information.
You might also like
ETF Drawbacks: The Downsides of Investing in ETFs
Every ETF is different: Some come with fees or may lack diversification because they follow one type of asset.
What Are Inverse ETFs and How Do They Work?
An inverse ETF, often known as a bear or short ETF, is an exchange-traded fund designed to profit from a market decline.
ETF vs. Mutual Fund: What’s the Difference?
The main differences between the two lie in how they trade on securities markets and the tax liabilities they can create for investors.
How Much Do ETFs Cost?
Although low costs are one of the advantages of exchange-traded funds, they still come with fees that reduce an investment’s overall return.
© Copyright 2023 Titan Global Capital Management USA LLC. All Rights Reserved.
Please refer to Titan's Program Brochure for important additional information. Certain investments are not suitable for all investors. Before investing, you should consider your investment objectives and any fees charged by Titan. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested, including principal. Brokerage services are provided to Titan Clients by Titan Global Technologies LLC and Apex Clearing Corporation, both registered broker-dealers and members of FINRA/SIPC. For more information, visit our disclosures page. You may check the background of these firms by visiting FINRA's BrokerCheck.
Various Registered Investment Company products (“Third Party Funds”) offered by third party fund families and investment companies are made available on the platform. Some of these Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. Before investing in such Third Party Funds you should consult the specific supplemental information available for each product. Please refer to Titan's Program Brochure for important additional information. Certain Third Party Funds that are available on Titan’s platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund.
The cash sweep program is made available in coordination with Apex Clearing Corporation through Titan Global Technologies LLC. Please visit www.titan.com/legal for applicable terms and conditions and important disclosures.
Cryptocurrency advisory services are provided by Titan. Cryptocurrency trading is provided by Bakkt Crypto Solutions LLC ("Bakkt Crypto"). Bakkt Crypto is not a registered broker-dealer or a member of SIPC or FINRA. Cryptocurrencies are not securities and are not FDIC or SIPC insured. Bakkt Crypto is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Cryptocurrency execution services are provided by Bakkt Crypto (NMLS ID 1828849) through a software licensing agreement between Bakkt Crypto and Titan. Please ensure that you fully understand the risks involved before trading: bakkt.com/disclosures.
Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.
Contact Titan at email@example.com. 508 LaGuardia Place NY, NY 10012.