This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Solar ETFs: Cloudy Outlook

As Germany aims to cut subsidies to the fledgling solar energy industry, the Market Vectors Solar Energy ETF (KWT) and Claymore/MAC Global Solar Energy ETF (TAN) have been hit hard in 2010. Year to date, KWT is down nearly 16%, while TAN has fallen more than 14%.

While times may be tough for these Germany-heavy portfolios, the recent dip may be a buying opportunity for risk-tolerant investors.

German-based companies, which make up 29.69% and 28.5% of TAN's and KWT's portfolios, respectively, have been under pressure as Germany looks to trim its government subsidies. Government support has helped to make Germany a solar energy hub, where production of panels has soared.

Last week, however, Environment Minister Norbert Roettgen announced that the government would propose a cut of 15% in addition to reductions already outlined in Germany's Renewable Energy Act. This helped to put further pressure on both TAN and KWT.

ETF investors should look beyond the current setbacks in Germany, and look instead at the long term potential for solar energy production. While Germany may be TAN's top country allocation, it is followed closely by China and the U.S., with 28.37% and 24.32% allocations, respectively. Rounding out KWT's three largest country allocations are also China and the U.S.

While Germany's subsidy setback has put a damper on TAN and KWT, China and the U.S. could help to lead these ETFs upward. China has the potential to become a dominant global leader in solar energy production, while green-energy initiatives in the U.S. could help to boost both funds in the months ahead.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
PBW $5.62 0.54%
TAN $44.87 0.94%
KWT $82.32 0.61%
AAPL $126.37 2.53%
FB $83.20 -0.13%


DOW 17,976.31 +263.65 1.49%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs