Over the last few weeks or so, alternative-energy companies have been rising dramatically.
With a Clean Energy ETF, you are able to expose your portfolio to several companies that are involved in sustainable energy at once. Whether you are a preacher of environmental action or not, it offers added diversification for any existing portfolio.
There are a few key factors to look at before investing in the sector, which is why we will look to review 10 popular clean energy ETFs UK for 2021.
Clean Energy ETF UK 2021 List
Take a look at our picks that appear appetizing to us for some of the popular clean energy ETF UK, further down we will break down with analysis into each investment into bitesize form.
- iShares Global Clean Energy ETF (ICLN)
- SPDR S&P Kensho Clean Power ETF (CNRG)
- Invesco Solar ETF (TAN)
- ALPS Clean Energy ETF ACES
- Invesco Wilderhill Clean Energy ETF (PBW)
Clean Energy ETFs UK Reviewed
The clean energy boom is very much current, and it may be somewhat tricky to know what companies individually will be the big beneficiaries of this.
But rather than trying to predict which specific companies will prosper, we have broken down the popular clean energy ETFs in the sections below.
It is key to note that prior to the pandemic the clean energy ETF sector generally speaking had been largely heading north. However, as detailed by the International Energy Agency (IEA), “The Covid-19 pandemic is having a major impact on energy systems around the world, curbing investments and threatening to slow the expansion of key clean energy technologies. Before the crisis, progress on clean energy technologies had been promising.”
However, as economies have gotten back going again and picked up momentum globally, this is being brought to the forefront of many global leaders’ agendas. With all that being said, it does appear to be an opportune time to start getting involved.
Let’s start with our first review and conduct an Ishares global Clean Energy ETF review. It is the largest ETF by almost double, having some $6 billion in assets under management. ICLN is one of the oldest funds which has been dedicated to clean energy. Founded in 2008, when climate change was not so much of a priority for many people.
The largest iShares Global Clean Energy ETF stock is Vestas Wind Systems, a huge organisation and is the energy industry’s global partner on sustainable energy solutions. We design, manufacture, install, and service wind turbines across the globe.
The fund had a powerful 2020, producing around 140% in gains, additionally, iShares Global Clean Energy ETF dividend was 0.83% for the year. However, it has under performed in 2021 as things have cooled off for the sector.
Technically speaking, the price of the ETF has found support and appeared to have bottomed out around $21.75, having held there firmly for some six months. Resistance is capping price action around $23.65, a break of this region should invite a nice wave of upside momentum.
If you were to invest $1000 from around the current price and ICLN was to head back up to the heights seen in early 2021 ($34.15), then your investment will turn into $1450 (45% gain). Worth noting from the current price level, it took just two months to previously reach the note high. (Past performance is not indicative of future results).
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2. SPDR S&P Kensho Clean Power ETF (CNRG)
SPDR S&P Kensho Clean Power ETF focuses on global stocks that are driving innovation in the clean energy sector, across both products and services. Given that the fund includes companies manufacturing revolutionary technology used for renewable energy, this is a popular pick in the sector.
Given the earlier detailed refocus across the globe with clean energy, the demand for the technology being crafted in this environmental mission will largely increase.
Moreover, many policymakers have also factored into their latest stimulus packages that will also allocate a budget to drive stronger development and deployment of clean energy technologies.
Technically, price action has been consolidating over the past six months, moving within a narrow range. However, there are signs of a breakout to the upside, given the formation of a technical chart pattern, known as a flag. However, this should not be taken on face value, since it is not indicative of future results.
3. Invesco Solar ETF (TAN)
The Invesco Solar ETF (TAN) is one of the forefathers in the clean energy ETF space and when these funds are on the up, TAN tends to be one of the pilots of those moves.
This solar energy ETF is provided by asset manager Invesco and has a chunky $3 billion in assets under management.
Similar to the other popular clean energy ETFs detailed, price action has been narrowing, subject to a potential breakout to the upside. Support should be noted at around $21.75, resistance is seen around $23.65. A breach of the latter could see a retest of the highs up at $34.30 printed in January 2021.
4. ALPS Clean Energy ETF (ACES)
The funding is allocated to the US energy transition is significant, which does present a potential investment opportunity for our next pick ALPS Clean Energy ETF (ACES). Some $1.2 trillion in total spending has been marked as necessary by 2030 in order to meet goals set in the Paris Climate Change Agreement.
It does bolster the case for ACES, given it has plenty of depth as it features exposure to nine industry groups. Moreover, among the individual clean energy stocks is Elon Musk’s Tesla. The electric vehicle (EV) giant is the largest holding in ACES at a weight of 5.73%. The bank is also bullish on some solar equities, including Sunrun (RUN).
In terms of the price technically, decent monthly support has been found around $65, with price action looking set for a renewed bout of purchasing pressure. A technical flag pattern can be observed via the monthly chart view. The high print similar to many of the other popular clean energy ETFs noted is some 45% away, but as previously detailed a move which has been seen over three months previously during the last bull-run. (Past performance is not indicative of future results).
5. Invesco WilderHill Clean Energy ETF (PBW)
This ETF has some decent-paying dividend stocks involved in clean energy and conservation. Invesco WilderHill Clean Energy ETF has around $2 billion in assets under management.
The fund has often been a bit overweight in solar stocks, including some big U.S.-based names, in addition to international solar stocks such as China’s JinkoSolar Holding Co. (JKS) and India’s Azure Power Global (AZRE), which pop up in its largest holdings. The Outperformance of solar has historically paid off for PBW.
In 2020 PBW enjoyed a red-hot year, having jumped as much as 300% thanks to the booming momentum, before losing some ground as an aftermath of the pandemic. The price has cooled just over 40% from the high print in 2021 around $138, however showing encouraging signs of renewed purchasing interest.
Key support for PBW has been found technically around $70.50 via the monthly.
Other Popular Clean Energy ETFs
- iShares ii plc Global Clean Energy UCITS ETF (INRG)
- Invesco Global Clean Energy ETF (PBD)
- iShares Global Clean Energy UCITS ETF (INRG)
- Lyxor New Energy (NRJL)
- L&G Clean Energy UCITS (LGIM)
What is a Clean Energy ETF?
Clean energy ETFs are exchange-traded funds that are ever-growing in interest from beginners to expert investors. ETFs invest in stocks in the alternative energy sector, which can cover the likes of; solar energy, wind, hydroelectric and geothermal companies.
If you are not an expert in the clean energy sector, then investing in exchange-traded funds is one way to gain exposure to this sector.
Features of Energy ETFs
Over recent years the concerns over the environment have grown and continue to do so, which is seeing an increasing number of renewable energy ETFs emerging.
Global leaders are making strong pledges and plan to boost infrastructure around clean energy, which is much to be excited about for the sector. For example, in April, U.S. President Joe Biden announced a new goal of reducing greenhouse gas pollution 2005 levels from 50% to 52% reduction by 2030. In terms of achieving the goal, it will be supported by all sorts of green initiatives, from offshore wind farms to incentives for alternative energy production.
Now there is a lot going on and much promising for clean energy, but let’s take a look at the recent updates and features that may determine your future investment decisions for Energy ETFs.
- Unstable fossil fuels price – As a result of the Covid-19 pandemic, demand for oil did largely, at one point it did briefly result in a massive price reduction which saw Crude oil prices fall to negative for the first time in history in the US. The fuel industry suffered a lot during the pandemic. Also, the stock prices of fuel companies dropped significantly.There has been substantial divestment by financial institutions, moving away from fuel companies given their observations of financial risks in the long term. Global warming and climate change are signs of it. Several manufacturing companies have commenced the production of low-emission products. Renewable energy is growing.
- Surging stats globally – In terms of addition in power capacity, they saw their highest year-on-year increase in over two decades last year — 45% to nearly 280 GW. With high capacity additions becoming the new norm, renewable energies now make a chunky 90% of the current power capacity expansion across the globe. Moreover, solar power system development is breaking pre-pandemic records, and it’s estimated to reach 162 GW by 2022. At the same time, wind capacity additions have increased 90% globally. The market growth for both is nearly 50% higher than it was on average back in 2019.
- Over-inflated stock pricing – There are a number of companies with the clean energy space that many analysts believe that should have naturally small caps, however, their current market caps are inflated several times over by mass demand and an under-supply of clean energy equities ready to service this demand.
Where to Purchase Clean Energy ETFs
In the sections below, you can find our reviews for two popular stock brokers for investing in clean energy ETFs in the UK.
eToro is a popular stock broker that serves over 26 million traders across 120+ countries. A recognized global stock broker that offers a full suite of financial products such as stocks, crypto, indices, forex, commodities, and ETFs. eToro has managed to establish a strong reputation given the simplicity of its platform features and pricing structure. Another feature to factor in is the platform’s zero commission trading structure for all investors.
eToro is regulated in Australia by the Australian Securities and Investments Commission (ASIC). The Financial Conduct Authority (FCA) regulates eToro in the UK. And in Cyprus, regulation is covered by the Cyprus Securities & Exchange Commission (CySEC).
eToro offers a wide variety of ETFs, some 250+, with the majority being index ETFs. Index ETFs track the stock exchange index of a particular country, for example, such as the UK’s FTSE 100, or US’s S&P 500, or a specific sector index. Other types of ETFs covered by eToro include commodity ETFs, real estate ETFs, bond ETFs, inverse ETFs, and leveraged ETFs.
The minimum ETF investment amount is set at an affordable $10. This means that you can purchase popular energy ETFs UK with a nominal amount of capital. Once your investment has been completed, you are able to monitor the value of your clean energy ETF whenever you want via your eToro portfolio. When you wish to cash out your clean energy ETF, this is very simple at the click of a button – as long as the respective market is open.
eToro has another popular feature which is CopyTrader, its eToro’s proprietary system for copy trading or also known as social trading. It is completely free of charge, you can review the performance of the biggest traders on the platform and then instruct CopyTrader to apply their trading activity using an allocation of your own funds. This happens in real-time. You are able to set aside whatever amount of funds that you want to be used. You can copy many traders at once.
|Stock Broker||Minimum Deposit||Fractional Shares?||Pricing System||Cost of Buying Stocks & ETFs||Fees & Charges|
|eToro||$10||Yes – $10 minimum||0% commission on ALL real stocks, spreads for CFDs||Market spread is not included when buying real stocks||No Deposit fees, $5 withdrawal fee, $10 inactivity fee, no account management fees.|
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2. Fineco Bank
Fineco Bank is a solid alternative given the sheer size of its asset library. To quantify that as an example, eToro is capped at around 250+ of the popular ETFs to purchase, whereas Fineco offers thousands of markets.
If you are a price-conscious trader, Fineco Bank is a highly competitive share dealing option with a broad range of investment options. But it does come with a price: a substandard offering of educational materials and research reports.
Fineco allows you to trade thousands of not only UK products, but also international ones too; exchange-traded funds (ETFs), stocks, bonds, and more complex instruments such as contracts for difference (CFDs), commodities, currencies, futures, and options.
With regards to the pricing, you pay a flat trading fee regardless of order size and can trade multiple products in local currencies from a single multi-currency account, with only one password and PIN to remember. The site currently offers new customers a £500 trading commission to use in the first three months.
Your money is at risk.
How to Invest in a Clean Energy ETF
As we draw to an end of our guide on the popular Clean Energy ETFs UK for 2021 – we are going to take you through the simple process of making your first investment.
In this demonstration, users can begin trading in just 4 simple steps.
Step 1: Open an Account
Head over to the homepage of your chosen broker and begin the account set-up process. You will be required to fill in your personal details – including your full name, email address and mobile number. Create a username and password for the platform to continue.
Step 2: Verifiy Your Identity
Most reputable brokers in the UK are regulated by the FCA – which is why users may be required to verify their accounts. To do this, simply upload proof of ID (a copy of your driver’s license or passport) and proof of address (a copy of a bank statement or utility bill). Once these documents have been uploaded, your broker should verify them in a couple of minutes.
Step 3: Deposit funds
The next step is to deposit funds into your trading account. Most brokers may support 1 or more of the following payment methods:
- Credit card
- Debit card
- Bank transfer
Choose your preferred payment option and deposit the funds into your account.
Step 4: Invest in Clean Energy ETFs
Once your account has been funded, proceed to search for any Clean Energy ETFs you wish to purchase on your platform’s search bar. Fill in the amount you want to credit into the trade, and confirm your transaction.
As detailed, at present, the industry is very much a trend one, so there are of course risks, but given the potential, it does present decent upside possibilities. This is why all users should carefully monitor ETFs and properly research and analyse the assets you are planning on adding to your portfolio.
Should you decide to invest in any ETFs, you may do so by using a reputable stock broker that caters to your investing needs.