Solar ETFs to buy in 2022
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Solar ETFs are funds that invest in a wide selection of stocks operating in the alternative energy sector. The most popular and common industry in this sector is solar energy. Our expertly selected guide highlights five of the best solar ETFs right now.
What are the top solar ETFs to buy?
There are many top ETFs to choose from, but we’re here to help you make a decision. That’s why our experts have analysed the market and found five of the most promising solar ETFs for 2021 which you can find listed below.
|#||ETF symbol||ETF name||Where to Trade|
|1||TAN||Invesco Solar ETF|
|2||QCLN||First Trust NASDAQ Clean Edge Green Energy Index Fund|
|3||TANP||HANetf Solar Energy UCITS ETF|
|4||ICLN||iShare Global Clean Energy ETF|
|5||PBW||Invesco WilderHill Clean Energy ETF|
1. Invesco Solar ETF (NYSEARCA:TAN)
The Invesco Solar ETF tracks the MAC Global Solar Energy Index which includes companies that produce solar energy. There are only 32 holdings in this ETF focusing on USA based and China based companies, although other locations are included.
Its top three holdings are SolarEdge Technologies Inc, Enphase Energy Inc, and SunRun Inc. It is considered a mid cap ETF as the average market cap of its portfolio is about $7.8 billion. However, it includes many small cap stocks in Europe and emerging markets globally.
It takes the top spot on our list due to historical growth and future prospects. Just over 25% of the ETF is made up of 3 companies, while almost 50% belong to USA based businesses. The past five years has seen an average gain of over 30%, including a large spike in 2020 amounting to 234%.
2. First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN)
Second on our list is an ETF that only invests in companies that are located in the United States. The First Trust NASDAQ is not explicitly solar focused, as other companies in the clean energy sector are featured, however it does include many solar based businesses.
The ETF tracks an equity index called the NASDAQ Clean Edge U.S. Liquid Series. The index is designed to to track the performance of clean energy companies publicly traded in the U.S.
Its largest solar focused companies included Enphase Energy Inc and SolarEdge Technologies Inc, both of which are featured in our first pick. Enphase and Solar Edge both work in the development of inverter systems to maximise power generated from the sun. The ETF is well balanced in its weighting to each company and its largest holding, Tesla makes up just 8.69%.
3. HANetf Solar Energy UCITS ETF (LSE:TANP)
The HANetf is the newest and smallest ETF on our list, which means it offers you the opportunity to invest early. Formed in June 2021, it seeks to offer pure-play exposure to the rapidly growing solar market. All of its 44 holdings are in some way or other involved in the solar industry.
It has a well balanced list of holdings, meaning no single company can influence its performance too much. Its top three holdings, Array Technologies Inc, West Holdings Corp and First Glass Group Co, make up less than 10% of the ETF.
This ETF is best suited to investors who are willing to tolerate risk because of its small size and recent inception. However, its purely solar focused investments mean it is a great way to track this ETF growing sector.
4. iShare Global Clean Energy ETF (NASDAQ:ICLN)
The largest renewable energy ETF available at the moment takes the fourth place on our list. It holds assets worth over $7 billion, came to market back in 2008, and has seen steady growth for the past five years.
Its holdings are split across the whole clean energy market with wind, and more importantly for this list, solar are featured often. Its largest holding, Enphase Energy is an American energy technology company who produce home solutions relating to solar generation.
It offers a well diversified selection of holdings although it does favour U.S. based companies, where nearly half of its exposure comes from.
5. Invesco WilderHill Clean Energy ETF (NYSEARCA: PBW)
The final place on our top five list goes to the WilderHill Clean Energy ETF by Invesco. It’s the third most held ETF in the alternative energy sector and tracks the WilderHill Clean Energy Index.
It’s one of the most well diversified ETFs, comprising 72 different stocks, each of which makes up 2% – 3% of the portfolio. Unlike other ETFs on our list, by spreading the money almost equally across all the stocks it owns, it aims to provide stability and access to the whole clean energy industry.
Solar stocks feature to some degree in this ETF. Its largest holding is a solar company featured in others on our list, Enphase Energy, a technology company that designs and manufactures solar generation home solutions.
Where to buy the best Solar ETFs
You can sell and buy ETFs in the same way as any normal stock. That means that before buying shares in an ETF you will need to sign up to a broker. The table below shows some of the best brokers offering ETFs. You can click the links and sign up in just a few minutes.
What is a solar ETF?
An ETF is an investment fund that is available to buy on the stock exchange. You are able to buy shares in an ETF through a stock broker. Each fund is designed to track the performance of a particular index or industry.
Solar ETFs are exchange traded funds that give investors access to companies in the solar energy sector. This doesn’t specifically mean companies that produce energy from the sun. Any company involved in the solar industry can be included in a solar ETF. There are not many pure solar ETFs around, however the solar industry does make up a large part of clean or renewable energy ETFs.
Are solar ETFs a good investment?
In a word, yes. Climate change has been pushing companies and consumers to cleaner energy sources for years, and in recent times even more. Generating energy from the sun is an industry that is almost certain to grow in the coming decades.
A report from Bloomberg in 2020 confirmed this, when it forecast $4.2 trillion of new solar investment by 2050. By 2040 its expected solar will be the largest source of global electrical capacity with over 35% more installed capacity that natural gas.
However, 2050 is still a long way ahead, so investing in solar ETFs are most suited for a longer term investor, who is happy to wait for their rewards. If you are ready to jump into solar ETFs, you can click the link below which will take you to a list of highly regarded brokers.
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