This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Solar ETFs: Cloudy Outlook

Stocks in this article: KWTTANPBW

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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