Ethanol: Behind the Buzz

In the U.S., rail manufacturers such as American Railcar Industries (ARII Quote) and Trinity(TRN Quote) are sold out well into next year on ethanol tankcar orders and profits have been on the rise.

Finding the Right Funds

Investing in ethanol opportunities can be difficult for individual investors because assets often lie on foreign exchanges or in private companies. Specialty investment funds can give investors access to these opportunities and provide valuable expertise. While no funds appear to focus exclusively on ethanol-related investment, several hold portfolios in renewable energy products and services. Some of the factors that drive the ethanol market also drive other renewable energy sources and fund managers are well-positioned to discover and exploit ethanol-related investment.

The leading fund is the PowerShares WilderHill Clean Energy Portfolio(PBW Quote), an exchange-traded fund that seeks to track the WilderHill Clean Energy Index. The fund is up more than 12% since the beginning of the year, buoyed in part by growing focus on clean energy at both ends of Pennsylvania Avenue and the Supreme Court's April 2 ruling that the Environmental Protection Agency has jurisdiction to regulate greenhouse gas emissions.