WSJ: clean energy ETFs on pace to beat last year’s record inflows despite recent weakness

By: Ruchi Gupta
Ruchi Gupta
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on Jun 28, 2021
  • Clean energy stocks benefited from the high number of investors and clean energy demand.
  • However, renewable energy ETFs are down double digits this year.
  • Investors aren't worried as clean energy ETFs have received $6.2 billion worth of inflows year to date.

Clean energy stocks soared last year following President Biden’s late 2020 election victory amid optimism his administration could expedite solar and wind energy adoption, The Wall Street Journal reported. But halfway into 2021 and the same story is not playing out yet investors who had bet on wind-turbine and solar makers are not yet panicking.

Clean energy ETFs report double-digit drops

The picture for clean energy stocks has been gloomy this year due to uncertainty on the Fed’s interest rate course and actions that could ultimately impact growth stocks. ETFs tracking clean energy indexes have reported double-digit drops in 2021. For instance, since December, BlackRock’s iShares Global Clean Energy ETF has dropped 18%, with Invesco Ltd.’s famous Solar ETF falling 17%.

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By contrast, clean energy stocks and funds surged considerably following market recovery from a COVID-19 induced swoon in 2020. Wind turbine and solar panel makers were among the companies that benefited from a growing number of investors and demand for renewables, even though most were small unprofitable ventures.

Despite the current situation, money has continued to flow in with individual traders and professional wealth managers investing $6.2 billion in clean energy ETFs year to date. The capital inflows are on track to surpass 2020’s record investments of $7.2 million, according to WSJ.

According to asset management companies and index makers, the share price pullbacks don’t reflect the desire to bet on clean energy companies. S&P Dow Jones Indices senior director of strategy and volatility indexes Ari Rajendra said, “It’s an area where we see continuous demand.”

Clean energy ETFs have received $2.7 billion this year

Renewable energy ETFs at BlackRock saw inflows of $2.7 billion this year, with $1 billion of the amount allocated towards a European clean energy fund. Since interest was high, S&P had to expand its clean-energy benchmark employed by Blackrock funds in order to address the problem of too much money for small and hard-to-trade companies, WSJ noted.

Gerber Kawasaki Wealth and Investment Management CEO Ross Gerber thinks that clean energy stocks will eventually change transportation and other aspects of life. Gerber has invested more client money into Invesco’s clean energy fund. He said:

The more speculative the stock, the higher the valuation. But in this market, people care more about fantasy than reality. So with solar, you have a little bit of the fantasy in there, too.

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