The 2021 United Nations Climate Change Conference, also known as COP26, is set to conclude at the end of this week. Meanwhile, the Justin Trudeau-led Liberals have made a variety of policy promises to combat climate change in the years and decades ahead. Back in October 2019, I’d discussed how the sustained public push would fuel growth in this space. Today, I want to look at three exchange-traded funds (ETFs) that offers broad exposure to this fast-growing space.
The latest climate summit should inspire you to target the green energy sector
In 2010, solar and wind energy combined to make up a mere 1.7% of global electricity generation. This grew to 8.7% in 2020. That outpaced many projections that had been laid in the beginning of the decade. For example, the International Energy Agency (IEA) predicted that global solar generation would reach 550 terawatt hours in 2030. It hit that number by 2018.
Allied Market Research recently released a report on the global renewable energy market. It projected that this space would reach a valuation of $1.9 trillion by 2030 compared to $881 billion in 2020. That would represent a CAGR of 8.4% over the forecast period. Indeed, investors should be eager for exposure to this promising market.
Here’s a clean energy ETF to buy on the dip
Harvest Clean Energy ETF (TSX:HCLN) invests in a portfolio of the 40 largest Clean Energy Issuers selected from the Clean Energy Investible Universe. That includes equities listed in North America, Europe, and Asia. Meanwhile, the fund offers medium risk to prospective investors, according to its own quick facts.
Shares of this green energy ETF have dropped 16% in 2021 as of early afternoon trading on November 9. Moreover, the ETF is up 11% month over month. Some of the top holdings in this portfolio include the China-based firm China Longyuan Power Group, United States-based companies like Daqo New Energy, First Solar, and SolarEdge Technologies.
This ETF is trading in the middle of its 52-week range. It is worth snatching up at the time of this writing.
Don’t sleep on these green energy ETFs
BMO Clean Energy ETF (TSX: ZCLN) launched on January 20, 2021. It aims to invest in companies that are involved in clean energy-related businesses. This involves tracking the S&P Global Clean Energy Index. Shares of this green energy ETF have plunged 24% in 2021. Meanwhile, it is up 10% compared to the previous month.
Some of the top holdings in this ETF include Enphase Energy, Vestas Wind Systems, and Plus Power. This ETF has major room to run, as the green energy space is set up for big growth over the course of the 2020s.
iShares S&P/TSX Capped Utilities ETF (TSX: XUT) is the final green energy-related ETF I’d consider snatching up in the first half of November. It offers investors exposure to some of the top utility companies in Canada. Shares of this ETF have increased 4.3% in the year-to-date period.
This fund boasts nearly 20% overall exposure to renewable electricity. Moreover, investors will recognize some top green energy names like Algonquin Power & Utilities, Brookfield Renewable Partners, and Northland Power. Moreover, the ETF also offers a monthly distribution of $0.082 per share. Indeed, that represents a 3.2% yield.
