The 10 solar and These ETFs easily eclipsed the S&P 500’s 2.6% uptick, through April 20. Companies in these ETFs are projected to grow earnings at an average annual rate of 12% to 24% over the next five years compared with 10% for the S&P 500. Yet many of their valuations are still cheaper than S&P.
Top 10 ETFs for Earth Day
Listed in descending order by assets under management.
|ETF Name||Ticker||Total Assets in $ Millions||% Expense Ratio||% Return YTD||Price/ Earnings Forward||Price/ Book||Price/ Sales||% Dividend Yield||% Proj EPS Growth 5 Year|
|Guggenheim Solar ETF||TAN||440.42||0.71||40.76||15.81||2.01||1.75||1.44||17.21|
|PowerShares WilderHill Clean Energy ETF||PBW||146.26||0.7||12.17||25.5||1.96||1.43||2.73||21.49|
|First Trust NASDAQ® Cln Edge® Grn Engy ETF||QCLN||88.33||0.6||12.65||23.74||2.58||2.1||0.8||14.83|
|Market Vectors® Global Alt Energy ETF||GEX||87.53||0.62||13.54||19.54||2.18||1.45||0.19||17.72|
|iShares Global Clean Energy||ICLN||85.58||0.48||28.82||19.43||1.84||1.87||2.31||20.17|
|PowerShares Cleantech ETF||PZD||76.38||0.67||6.08||22.23||2.81||1.58||0.8||11.99|
|PowerShares Global Clean Energy ETF||PBD||71.28||0.76||14.41||17.77||1.74||1.41||0.96||20.63|
|First Trust ISE Global Wind Energy ETF||FAN||39.93||0.6||11.4||17.14||1.07||0.84||2.34||16.47|
|PowerShares WilderHill Prog Engy ETF||PUW||33.82||0.7||7.67||18.82||1.32||0.7||1.84||12.86|
|Market Vectors® Solar Energy ETF||KWT||26.65||0.66||30.31||13.68||1.76||1.58||0.55||23.81|
|SPDR® S&P 500 ETF||SPY||177,886.79||0.09||2.55||18.17||2.59||1.73||1.91||10.18|
|Year-to-date returns through April 20, 2015|
Among this list, John Divine, assistant editor at InvestorPlace.com in Rockville, Md. recommends ICLN for its cheap expense ratio of 0.48%, which is much lower than the category average of 0.64%.
“The higher the fees, the more you’re missing out on compounding returns, which adds up to a pretty substantial opportunity cost over the long-term,” Divine said. “There have been numerous studies showing that funds and managers that charge higher fees are not able to compensate for their high fees with better performance. So there’s no logical reason to own expensive funds or ETFs over the long-term.”
“ICLN pays out a modest dividend, is diversified across market caps, and owns companies that actually make money,” Divine added.
Divine, however, dislikes how ICLN is heavily concentrated in Asia, especially China, with a 43% weighting in the ETF. The largest holding, Chinese solar company Hanergy Thin Film Power, accounts for 20% of the portfolio after it exploded about 550% in the past year.
“If Hanergy comes back down to earth, ICLN will be in for a rude awakening,” Divine warns. “And with several analysts claiming Hanergy stock is wildly overvalued at current levels, a selloff is a real possibility.
Currently it’s the most valuable solar company in the world, and some have speculated the stock price has been manipulated.”
Trang Ho is the founder of Key Financial Media LLC, which produces content and thought leadership for financial advisors and investment strategists.