Best Renewable Energy Investment Funds UK – Invest with Zero Fees

Over the past decade, the popularity of renewable energy has skyrocketed, with more and more companies researching greener ways to generate power. As such, renewable energy funds have become an increasingly attractive investment for investors worldwide.

This guide will analyse the Best Renewable Energy Investment Funds UK for 2021, touching on why they are a good investment and how you can invest in them commission-free.

Best Renewable Energy Investment Funds UK List

The list below highlights ten of the best renewable energy funds UK that you can invest in today. In the section that follows, we will dive into each of these funds in detail, providing you with the crucial information you need in order to make an informed investment decision.

  1. VanEck Vectors Semiconductor ETF – Overall Best Renewable Energy Investment Fund UK – Invest Now
  2. Invesco Solar ETF – Best Renewable Energy Investment Fund UK for Solar Energy Invest Now
  3. iShares PHLX Semiconductor ETF – Best Renewable Energy Fund for US Exposure – Invest Now
  4. ARK Innovation ETF – Best Renewable Energy Investment Fund UK for Diversification
  5. Renewable Energy CopyPortfolio – Low-Cost Renewable Energy Portfolio
  6. BlackRock Sustainable Energy Fund – Best Renewable Energy Investment Fund UK for Capital Growth
  7. VT Gravis Clean Energy Income Fund – Best Renewable Energy Investment Fund UK for Passive Income
  8. S&P Global Clean Energy Index – Best Renewable Energy Investment Fund UK for Clean Energy Production
  9. Invesco WilderHill Clean Energy ETF – Best Renewable Energy Investment Fund UK for Huge Returns
  10. Gresham House Energy Storage Fund – Best Renewable Energy Investment Fund UK for Investing in UK Companies

Best Renewable Energy Funds UK to Invest in Reviewed

Renewable energy funds are a type of mutual fund that is becoming increasingly popular worldwide thanks to their potential returns, but also due to the fact they offer an ethical investment opportunity. However, as is always the case when investing in a particular fund, you must do your due diligence and research your options thoroughly before making your investment.

In the section below, we provide an in-depth look at the ten best renewable energy investment funds UK that were mentioned in the list above. Our analysis will cover each fund’s asset composition and performance, helping you make the best investment decision possible.

1. VanEck Vectors Semiconductor ETF – Overall Best Renewable Energy Investment Fund UK

Our number one pick when it comes to the best renewable energy investment funds UK is the VanEck Vectors Semiconductor ETF. This fund invests in a range of companies involved in the production of both semiconductors and energy-producing equipment. Semiconductors are vital when it comes to energy efficiency, as they allow the specific element (such as wind or solar power) to be transformed into usable energy. Furthermore, they also play a part in energy storage.

VanEck Vectors Semiconductor ETF

Looking at this fund’s performance, you can immediately see just how much capital growth it can generate for investors. It has returned over 30% in five of the last nine years, and even returned 64% in 2019 alone! Furthermore, this fund only generated a negative return in 2015 and 2018. Finally, since the beginning of the year, this fund is also up a healthy 10.31% overall. Combine this consistent performance with a low expense ratio of only 0.35%, and you can see why we recommend this fund to a wide range of investor types.

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2. Invesco Solar ETF – Best Renewable Energy Investment Fund UK for Solar Energy

Solar power has become increasingly popular across America and Europe over the last decade as an alternative way to generate electricity for both homes and businesses. The Invesco Solar ETF holds solar-based equities worth $4.12 billion, aiming to provide annual returns that are both consistent and significant. Some of this fund’s top holdings are Enphase Energy, SolarEdge Technologies, and Sunrun Inc.

Invesco Solar ETF

Due to the rise in popularity of solar power, this fund has seen some fantastic returns in recent times. In the past year alone, the fund has returned 178.07% to investors and even returned 65.65% in 2019 too! However, it is wise to note that this fund does exhibit large amounts of volatility, often changing from a positive return in one year to a negative return in the next. If you’re happy to take on this risk and are interested in investing in the Invesco Solar ETF, you can do so with eToro – commission-free!

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3. iShares PHLX Semiconductor ETF – Best Renewable Energy Investment Fund UK for Exposure to the US Semiconductor Market

Much like the first fund on our list, the iShares PHLX Semiconductor ETF aims to provide exposure to the growing semiconductor industry, specifically within the US marketplace. This offers an excellent way for investors to get involved in the US market, where most of the large semiconductor firms are operating. These firms are becoming increasingly attractive to investors thanks to ESG (environmental, social, and corporate governance) factors, along with their growth potential.

iShares PHLX Semiconductor ETF

This fund holds 30 of the top-performing semiconductor equities within the US and has provided impressive returns over the past couple of years – it even returned 52.93% in 2020, which is admirable considering the scale of the Coronavirus pandemic. As semiconductors are set to become increasingly popular due to a shift towards renewable energy, this fund is a great option for investors who are happy to take on a little more risk for a chance to make significant annual returns.

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4. ARK Innovation ETF – Best Renewable Energy Investment Fund UK for Diversification

If you’re looking to invest in one of the best UK renewable energy funds UK, the ARK Innovation ETF is a great option thanks to its potential for growth but also its diversification benefits. This fund invests in ‘innovative’ companies related not just to renewable energy but also other areas such as DNA technologies and Fintech. As such, it provides a diversified asset that looks to capitalise on shifts in the global landscape.

ARK Innovation ETF

This fund generated a remarkable return for investors in 2020, returning 152.52% for the whole year. Furthermore, it has produced a positive return in four of the last five years and even returned 87.38% in 2017. These returns can be attributed to the fund manager’s intelligent stock picks combined with the disruptive nature of the fund’s equities. With a modest expense ratio of 0.75%, this fund is a great way for investors to benefit from shifts in the business atmosphere caused by climate change and digitalisation.

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5. Renewable Energy CopyPortfolio – Low-Cost Renewable Energy Portfolio

Although this is not technically a ‘renewable energy fund’, the Renewable Energy CopyPortfolio is worth mentioning due to the many benefits it offers. The Renewable Energy CopyPortfolio is a tailor-made portfolio created by eToro’s investment and research team and is designed to provide exposure to companies that are developing ways to generate clean energy. This CopyPortfolio contains a number of large-cap firms involved in various environmentally friendly activities, such as solar power generation, recycling, battery charging, and clean transportation.

eToro Renewable Energy CopyPortfolio

The great thing about eToro’s CopyPortfolios is that you get access to an actively managed portfolio in a cost-effective manner. Although the minimum investment amount is higher than other eToro assets, you do not have to pay any management fees once you have invested, saving you money in the long term. So, if you are looking for a medium to long-term investment, the Renewable Energy CopyPortfolio is an option worth exploring.

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6. BlackRock Sustainable Energy Fund – Best Renewable Energy Investment Fund UK for Capital Growth

If you are in the market for long term capital growth, the BlackRock Sustainable Energy Fund is worth considering. This fund invests at least 70% of its capital into companies involved in clean energy projects and avoids companies engaged in sectors related to the production of coal, gas, and oil. Through the fund’s investments into these clean energy companies, it aims to maximise capital growth for investors over the mid to long term.

BlackRock Sustainable Energy Fund

Having been in operation since 2001, this best investment fund has experienced some fantastic returns in recent years, generating 25.2% and 45.8% returns for investors in 2019 and 2020 respectively. Holding a mixture of assets from the US, UK, and Europe, the BlackRock Sustainable Energy Fund also offers investors a diversified asset that provides exposure to various geographical areas. If you are someone who is looking to park their capital to grow it over a period of years, this fund may be a great option for you.

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7. VT Gravis Clean Energy Income Fund – Best Renewable Energy Investment Fund UK for Passive Income

As most renewable energy firms tend to reinvest their profits back into the company rather than provide dividends, the majority of renewable energy funds tend not to offer a significant yield to investors. However, if you are in the market for a passive income, then the VT Gravis Clean Energy Income Fund is one of the few renewable energy funds that offers an attractive price yield.

VT Gravis Clean Energy Income Fund

This fund offers a yield of 3.04% to investors, meaning that if you looked at how to invest 5000 pounds into this fund, you could expect to receive a total of £170 in dividend payments each year. These payments are made quarterly, providing investors with a regular passive income stream to add to their portfolio. In addition, the fund has also performed well when it comes to annual returns too; it generated an impressive 34.3% for investors in 2019 and 27.1% for investors in 2020.

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8. S&P Global Clean Energy Index – Best Renewable Energy Investment Fund UK for Clean Energy Production

Standard and Poors (S&P) are best known for the S&P 500 index – but they also provide a clean energy index too. The S&P Global Clean Energy Index is designed to measure the performance of 30 of the world’s leading companies when it comes to generating clean energy. With net assets of $5.79 billion, this index fund aims to track some of the best renewable energy firms in the world, including Plug Power Inc and Enphase Energy.

S&P Global Clean Energy Index

Looking at returns, this index fund generated an incredible 141.31% for investors in 2020. So, if you had invested £5000 at the start of the year, your position would be worth £12,065.50 at the end of the year! Furthermore, the S&P Global Clean Energy Index only charges a relatively small expense ratio of 0.46% annually – which, given the returns the fund makes, is nothing to be concerned about. Although this investment would be riskier than others due to the companies’ nature within the index, it is an excellent option for people looking to generate higher returns than the FTSE 100 or other equivalent indices.

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9. Invesco WilderHill Clean Energy ETF – Best Renewable Energy Investment Fund UK for Huge Returns

If you are a particularly risk-seeking investor who is happy to invest in a higher-volatility renewable energy fund in order to potentially generate huge returns, then the Invesco WilderHill Clean Energy ETF might be worth considering. This fund invests in 69 of the US’s best clean energy firms, predominantly focused on small-cap blend and small-cap growth stocks. Due to the nature of these stocks, this fund is high-risk but has the ability to generate incredible returns.

Invesco WilderHill Clean Energy ETF

Looking at past performance, the fund has done exceptionally well in recent times, returning 189.89% to investors in the past year alone. Furthermore, it returned 61.85% to investors in 2019. However, as mentioned previously, this fund does exhibit high volatility; it has produced a negative return in four of the past eight years. It is worth noting though that these negative returns were never as high as the positive returns – this highlights that, even if the fund does end the year negative, there is a good possibility that it will make a more significant positive return in the following year.

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10. Gresham House Energy Storage Fund – Best Renewable Energy Investment Fund UK for Investing in UK Companies

The last fund we will analyse when discussing the best UK renewable energy fund UK is the Gresham House Energy Storage Fund. This fund primarily invests in companies based in the UK that are involved in producing renewable energy, mostly related to batteries. The fund seeks to provide investors with both long-term capital growth and consistent dividend payments.

Gresham House Energy Storage Fund

Over the past year, the fund has returned a solid 24.57% to investors, comfortably beating the returns produced by the FTSE 100 index. Furthermore, the Gresham House Energy Storage Fund offers an attractive yield of 6.11% to investors, distributed every three months. With the UK government placing more emphasis on renewable energy, this fund makes for an appealing option for both retail and professional investors across the country.

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What are Renewable Energy Investment Funds?

Renewable Energy Investment Funds are a type of fund that invests in companies immersed in the production of renewable energy. This energy can come in many forms, but solar energy, wind energy, hydro energy, and even geothermal energy are the main ones. These energy types are becoming increasingly popular due to the low impact they have on the environment compared to other types, such as coal and gas.

Due to the increasing popularity of renewable energy over the past two decades, firms that operate within the sector have experienced a notable rise in both size and volume. Companies such as Vestas Wind Systems and Canadian Solar are striving to change the way people and businesses use energy, intending to reduce carbon emissions and tackle climate change. Looking at the stats, it can be seen that these firms are already doing a fantastic job – renewables accounted for 30% of global electricity generation in 2020.

etoro invest in renewable energy funds UK

The incredible potential for growth within the renewable energy sector has seen an increase in the number of renewable energy funds in existence. The best renewable energy investment funds UK aim to focus on firms that have both strong balance sheets and solid cash flows, as these firms are better poised to grow over the mid to long term. Furthermore, these funds also tend to invest in firms who reinvest their profits back into the business rather than distribute it as dividend payments. Thus, although renewable energy funds often generate incredible returns, they are not the best option for producing current income.

Why Invest in Renewable Energy Funds?

As touched on previously, renewable energy funds are becoming increasingly popular with a wide variety of investors. In this section, we discuss three of the main reasons renewable energy funds might represent one of the best long term investments.

Market-Beating Returns

As you would have noticed earlier in this guide, the level of returns that these funds are capable of is astronomical compared to some of their peers. It is not uncommon for renewable energy funds to return over 100% in a calendar year, with some returning nearly 200% in certain years!

However, these market-beating returns are not always the case; the smaller nature of renewable energy funds means that returns tend to be more volatile. Looking at the image below, you can see that renewable energy returns are outpacing oil & gas returns overall but are still below the global stock market over the long term. So, although renewable energy funds are undoubtedly capable of producing market-beating returns, it is wise to remember that these funds’ inherent risk means that negative returns are a genuine possibility.

renewable energy funds returns

Exposure to a Growing Market

Another reason to invest in renewable energy funds is that they provide an avenue to gain exposure to a prospering market. Taking the UK as an example, the renewable energy market is projected to grow at a compound annual growth rate (CAGR) of more than 9% between now and 2026. Furthermore, the renewable energy market is expected to value $1.5trillion worldwide by 2025.

These stats highlight the potential scale that this market is expected to reach, which is why many investors are looking to get involved at the ground level. The best renewable energy funds UK provide a cost-effective approach to gaining exposure to this market, and with the societal shift towards cleaner energy, these funds are expected to continue to increase in popularity. If you are interested in investing in funds such as this, we recommend using eToro, as you can invest commission-free and for as little as $50 (around £36).

Provides an Ethical Investment Strategy

The third reason that renewable energy funds UK present an attractive opportunity is because they are considered one of the best ethical investments available in the marketplace. It is common knowledge that fossil fuel usage has a detrimental impact on the sustainability of business operations in the modern age. Due to this, alternative energy sources are becoming more popular thanks to their low impact on the environment and their renewable nature.

Energy technology based on solar power and offshore wind farms is leading the way when it comes to renewable energy, as they do not pollute the atmosphere in the same way that oil and gas does. Thanks to their low or non-existent greenhouse emissions, renewable energy firms are becoming increasingly attractive to investors who have the foresight to invest ethically. Thus, renewable energy funds are a great way to do this cost-effectively and efficiently.

Best Renewable Energy Funds Brokers

Now that you’ve had a glimpse at a selection of the best renewable energy funds UK, and you understand why they make an attractive investment, it is time to discuss some of the best stock brokers to utilise to open your position.

In the section below, we discuss two of our recommended brokers to invest in renewable energy funds.

1. eToro – Invest in Renewable Energy Funds UK with 0% Commission

Our recommended broker when it comes to investing in renewable energy funds is eToro. With over 20million users worldwide, eToro is the favoured broker of many different types of investors thanks to their easy-to-use platform and attractive fee structure. Furthermore, eToro is regulated by the FCA and is also covered by the FSCS, meaning you have the highest protection levels for your capital.

best renewable energy funds UK etoro

67% of retail investor accounts lose money when trading CFDs with this provider

One of the main reasons to use eToro is because they do not charge any commissions when you place a trade. When you place a transaction with a number of other stock brokers, you have to pay 1-3% of your position size in commissions. For example, if you made a £1000 trade with a 1% commission, you’d have to pay £10 in fees, effectively increasing your total spend to £1010. With eToro, you do not have to pay this commission, meaning you can save a lot of money in the long run.

Furthermore, when you trade renewable energy funds with eToro, you can invest for as little as $50 (around £36). This allows you to start small and gradually increase your position over time, rather than having to invest a large amount of capital immediately. In addition to this, eToro also allows users to invest in their ‘CopyPortfolios’, which are professionally managed portfolios of assets in which you do not have to pay any management fees!

etoro renewable energy copyportfolio

If you’d like to use eToro, you can sign up and be in a position to trade in as little as ten minutes. What’s more, you can fund your account through a variety of methods, including credit/debit card, bank transfer, and even various e-wallets.

Pros:

  • Super user-friendly online trading platform
  • Invest in renewable energy funds without paying any commission or share dealing charges
  • Trade CFDs in the form of stocks, indices, commodities, forex, and more
  • 2,400+ stocks listed on the UK and international markets
  • 250+ ETFs
  • Deposit funds via debit/credit card, e-wallet, or UK bank transfer
  • Ability to copy the trades of other users
  • FCA and FSCS protections

Cons:

  • Not suitable for advanced traders that like to perform technical analysis
  • No ISAs or SIPPs

67% of retail investor accounts lose money when trading CFDs with this provider

2. Capital.com – Best CFD Broker to Invest in Renewable Energy Funds

new capital.com logo

If you are looking for an alternative broker to eToro, our second favourite is Capital.com. With a fantastic reputation throughout the UK, Capital.com is an FCA and CySEC regulated broker that offers commission-free trading on many financial instruments.

Notably, Capital.com offers CFD trading facilities, which involve purchasing a contract based on an asset’s underlying price rather than owning the asset itself. This trading method is a favourite of many investors as it allows them to speculate on an asset’s price movements without having to own it.

capital.com invest in renewable energy funds UK

One of the major benefits of using Capital.com is that they offer leverage of up to 1:5 when trading their funds. What this means is that you can ‘boost’ your position size up to 5X, providing you with an avenue to increase potential returns. For example, if you invested £1000 in a fund, you can use Capital.com’s leverage facilities to effectively 5X your position size to a total of £5000.

Finally, Capital.com make their money through the small spread between their bid and ask prices – however, this spread tends to be minimal. If you like the sound of using Capital.com, you can open an account quickly and easily and can fund your account with as little as £20. You can even utilise their demo account to practice before you trade for real if you wish to do so.

Pros:

  • Educational app for new traders
  • Invest in renewable energy funds with 0% commission
  • Small spreads
  • Up to 1:5 leverage available
  • AI assistant identifies your weak points
  • Excellent charting and analysis interface
  • £20 minimum deposit

Cons:

  • Cannot build custom trading strategies
  • CFDs only

71.2% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.

How to Invest in Renewable Energy Investment Funds on eToro Tutorial

Now that you have all the necessary information to inform your investment decision, it is time to show you the exact process you need to follow. This section will provide a step-by-step guide that shows you how to invest in renewable energy funds UK with FCA-regulated broker eToro.

Step 1: Open your Account

The first step involves opening your account with eToro. Simply head to their website and click the 'Join Now' button – you can also do this through their investment app. After this, all you need to do is enter some personal information, provide some contact info, and choose a username and password.

etoro sign up

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Step 2: Verify your Identity and Address

eToro operates under the strictest FCA guidelines to protect you and your money, so new users must verify their identity and address. Luckily, this process is straightforward and can be completed in minutes. Simply upload proof of ID (a copy of your passport or driver's license) and proof of address (a copy of a bank statement or utility bill), and you're good to go!

Step 3: Fund your Account

Now you can deposit it into your account. With eToro, you can do this in various ways, such as credit/debit card, bank transfer, or e-wallet. However, the fastest and more efficient way is via credit/debit card as the funds will arrive instantly.

Step 4: Search for your chosen Renewable Energy Fund

You are now able to search for your chosen renewable energy fund. Simply click the search bar at the top of the screen and type in the fund’s name. In the example below, we are looking to invest in VanEck Vectors Semiconductor ETF. Once you’ve found it, click the ‘Trade’ button.

best renewable energy investment funds UK etoro

67% of retail investor accounts lose money when trading CFDs with this provider

Step 5: Invest in a Renewable Energy Fund UK

The final step involves placing your investment in your chosen renewable energy fund. Simply enter your position size (minimum of $50), double-check everything is correct, and click 'Set Order'.

etoro invest in renewable energy funds

Congratulations! You are now an investor in a renewable energy fund, completely commission-free!

eToro - Invest in Renewable Energy Funds with 0% Commission

In summary, the best renewable energy funds are a fantastic option for investors looking to gain exposure to the green-energy sector cost-effectively. With companies becoming increasingly aware of the need to update their operations due to climate change, the renewable energy sector is in a prime position to benefit from this shift in the way business is conducted.

If you would like to gain exposure to the renewable energy sector, you can invest in a renewable energy fund with FCA-regulated broker eToro. The process of investing only takes around ten minutes to complete, and what’s more, you can do so without having to pay a penny in commissions!

67% of retail investor accounts lose money when trading CFDs with this provider.

FAQs

Are renewable energy funds a good investment?

With the gradual shift in business processes towards 'greener' ways of doing things, renewable energy sources such as wind turbines and solar power are becoming more prevalent. As such, firms in the renewable energy sector could benefit from this shift, providing better returns for renewable energy funds. So, in terms of if they are a good investment, many analysts and advisors would argue that they are.

What sort of assets does a renewable energy fund invest in?

Renewable energy funds invest in the shares of companies that operate in the renewable energy sector. These companies tend to focus on the research and development of clean energy sources derived from elements such as wind power and solar power.

How much money do I need to invest in a renewable energy fund?

This depends on who you invest with. If you invest directly with the fund provider, you usually need a larger minimum investment. However, with eToro, you can invest for as little as $50 (around £36).

What sort of returns can I make by investing in a renewable energy fund?

You can make fantastic returns by investing in renewable energy; however, the companies tend to be smaller and less established. Therefore renewable energy funds can be a much riskier investment. On the other hand, returns can be exceptional – for example, the Invesco WilderHill Clean Energy ETF returned 189.89% over the last year!

Is now a good time to invest in a renewable energy fund?

With many countries pledging to reduce their emissions over the next few years, renewable energy firms are set to become even more popular. As such, 2021 and the following years may be a great time to invest in renewable energy funds.

Connor Brooke

About Connor Brooke PRO INVESTOR

Connor is a Scottish financial expert, specialising in wealth management and equity investing. Based in Glasgow, Connor writes full-time for a wide selection of financial websites, whilst also providing startup consulting to small businesses. Holding a Bachelor’s degree in Finance, and a Master’s degree in Investment Fund Management, Connor has extensive knowledge in the investing space, and has also written two theses on mutual funds and the UK market.

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