Alternative Energy ETFs: Murky Outlook

With the iShares Dow Jones U.S. Industrials (IYJ) up about 5% this year, it makes sense for PUW to be up as well, given that it owns industrials that are also found in IYJ. Unfortunately for investors looking to invest in this alternative energy leader, PUW has meager volume of about 10,000 shares per day.

Therefore, while PUW looks to be the best of the alt-energy bunch right now, eager investors should be wary of the fund's low liquidity, as during the "flash crash" this past May, PUW briefly plummeted to 14 cents per share. For now, better bets may be found in the natural gas sector , which is considered by many to be a bridge fuel.

Overall, with potential federal legislation hanging over the sector, alternative energy ETFs look to be a murky area of investment in the near future.

-- Written by Don Dion in Williamstown, Mass.

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At the time of publication, Dion Money Management was not long any of the equities mentioned.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

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