9 Best-Performing Clean Energy ETFs for December 2022

Want to invest in wind or solar energy? Clean energy ETFs make it easy.

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The clean energy sector has been reinvigorated by a presidential administration excited about combating climate change. In April, President Biden announced a new goal of a 50% to 52% reduction from 2005 levels in greenhouse gas pollution by 2030. This goal will be supported by all sorts of green initiatives, from offshore wind farms to incentives for alternative energy production.

The clean energy boom is new, and there’s no way to know what companies will be the belles of the ball. But rather than try to predict which specific companies will prosper, you can invest in clean energy ETFs and gain wider exposure to the industry as a whole.

What are clean energy ETFs?

Clean energy ETFs are exchange-traded funds that invest in stocks in the alternative energy sector, which might include solar energy, wind, hydroelectric and geothermal companies. Like other types of funds, clean energy ETFs can easily diversify your portfolio. ETFs also tend to be less expensive than mutual funds.

Best-performing clean energy ETFs

Below is a list of the best-performing clean energy ETFs.

» Excited about clean energy ETFs? Here are the best online brokers for ETF investing

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Clean energy ETFs in detail

Need a little more information? Here are three clean energy ETFs from the list.

Invesco Solar ETF (TAN)

The Invesco Solar ETF is the second-largest alternative energy ETF with close to $3 billion in assets under management. TAN has a total expense ratio of 0.69% and a majority allocation of solar energy holdings. Because this fund specializes in one form of alternative energy, it may not be as diversified as other funds that invest in various types of energy. At the time of this writing, TAN’s top three holdings include Enphase Energy; SolarEdge Technologies, which is a company that creates inverter systems for solar energy systems; and Xinyi Solar Holdings, a solar glass manufacturing company.

» How are sustainable funds measured? Learn more about ESG

iShares Global Clean Energy ETF (ICLN)

With nearly $6 billion in assets under management, this ETF is the largest by nearly double. ICLN has an expense ratio of 0.46%, which is a little higher than the average ETF expense ratio, and the fund earns an “A” (a high rating) for its MSCI ESG score, which measures the fund against environmental, social and corporate governance factors. Currently, ICLN’s top three holdings include Vestas Wind Systems, which specializes in the design and installation of wind turbines; Orsted, a Denmark-based energy company that works in offshore and onshore wind with a commitment to become carbon neutral by 2025; and solar panel and storage company Enphase Energy.

Invesco WilderHill Clean Energy ETF (PBW)

Invesco WilderHill Clean Energy ETF has nearly $2 billion in assets under management. This ETF tracks the WilderHill Clean Energy Index and is made up of stocks involved in clean energy and conservation. PBW has an expense ratio of 0.70%, making it the most expensive of the three largest clean energy ETFs. Currently, its top three holdings include MYR Group, an electrical construction company; Daqo New Energy Corp., a company that produces a material used in the solar energy industry; and Albemarle, which produces lithium, bromine and catalyst solutions.

» View our list: The best EV stocks

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Support the social and environmental initiatives you believe in, all while building your portfolio.

Why invest in clean energy ETFs

Between the new White House green initiatives and a large number of automakers committing to making electric vehicles, the long-awaited “green revolution” may have arrived.

Clean energy ETFs offer access to energy companies without having to pick and choose stocks yourself. If you want, you can find clean energy ETFs that specialize in solar or wind, or just opt to invest more broadly across the alternative energy industry.

» Want more options? Check out the top-rated ESG funds

Learn more

Frequently asked questions

The largest clean energy ETF is the iShares Global Clean Energy ETF (ICLN). At the time of this writing the fund had nearly $6 billion in assets under management

The best alternative energy stock is the one that makes the most sense for your portfolio. To see a list to draw inspiration from, check out the best-performing renewable energy stocks.

This depends on several factors: Are you already invested in specific forms of green energy? What does your existing portfolio look like? How much risk are you willing to take with your investments?

When you can answer these questions, you can start to explore the various industries within the green energy sector, such as wind, solar, hydroelectric and geothermal investments.

» Need some help? Learn more about diversification

Data is intended for informational purposes only.

Neither the author nor editor held positions in the aforementioned investments at the time of publication.
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