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Top 10 Alternative Energy ETFs

Stocks in this article: PWND KWT FAN ICLN PBD

There are currently less than 20 ETFs oriented to the alternative energy sector. Many are struggling to gain AUM (Assets under Management) and performance success. Some may not succeed as new technologies come and go. Previously nuclear energy held great promise until the Fukushima plant disaster despite its age and unique circumstances blunted growth in the sector.

The energy sector remains volatile and politically controversial given the recent higher spikes in oil prices in 2008, 2011 and now again in early 2012. The struggle to move away from carbon based energy sources seems now and again promising, but then not. U.S. companies within the solar energy complex have seen failures with some, like Solyndra, having political controversies. In the solar space in particular, China has undercut U.S. solar panel manufacturers in price causing many to either fail or unable to remain competitive. Chinese companies are also dominating wind power sectors as well noted in holdings for many wind related ETFs.

Even as oil prices rise any meaningful success will take years and decades to achieve success. Frankly much of this has been due to nearly 40 years of political gridlock and an absence of leadership regarding overall energy policies.

As a result, and no matter how seductive alternative energy sources are and how high carbon based fuel remains, little progress or profits have accrued to alternative energy companies and ETFs.  You'll note AUM (Assets under Management) are declining in ETFs oriented to the sector and performance has been terrible overall.

ETFs are based on indexes tied to well-known index providers including Russell, S&P, Barclays, MSCI, Dow Jones and so forth.

To add value, we feature a technical view of conditions from monthly chart views where enough data is available. Simplistically, we recommend longer-term investors stay on the right side of the 12 month simple moving average. When prices are above the moving average, stay long, and when below remain in cash or short. Premium members to the ETF Digest receive added signals when markets become extended. Then DeMark indicators often trigger a signal to exit overbought/oversold conditions. Generally, these indicators when used in this manner help investors avoid sharp declines and/or reversals.

AUM overall have recovered since the previous write up in November 2011. However, recent gains have been given back as U.S. solar companies remain uncompetitive.

#10: PowerShares Global Wind Energy ETF (PWND)

PWND follows the NASDAQ OMX Clean Edge Global Wind Energy Index which is a lot of words to say "wind ETF". The fund was launched July 2008. The expense ratio is .75%. AUM is just shy of $16M which is again below the threshold for reasonable issue success. Average daily trading volume is just under 10K shares. As of mid-February 2012 the annual dividend yield is .32% and YTD performance 40.65%%. The one year return was -26.70% which puts it about even.. 

PWND Top Ten Holdings & Weightings

Data as of First Quarter 2012

  1. China Longyuan Power Group Corp Ltd. (CLPXF): 11.08%
  2. EDP Renovaveis SA (EDPR): 10.96%
  3. Enel Green Power S.p.A. (EGPW): 9.78%
  4. Vestas Wind Systems A/S (VWS): 8.49%
  5. Infigen Energy (IFN): 4.53%
  6. Innergex Renewable Energy, Inc. (INE): 4.30%
  7. Huaneng Renewables Corporation Ltd (00958): 4.25%
  8. Nordex AG (NDX1): 4.15%
  9. Gurit Holding AG (GUR): 3.93%
  10. China Datang Corporation Renewable Power Co., Ltd. Class H (01798): 3.92%

#9: Market Vectors Solar Energy ETF (KWT)

KWT follows the Ardour Solar Energy Index includes publicly traded companies globally that derive two-thirds of their revenue from solar power and related products. Weighted companies receive 90% of their revenues in this manner. The fund was launched April 2008. The expense ratio is .65%.

AUM are over $18M and average daily trading volume is around 53K shares. As of mid-February 2012 the annual dividend yield is 5.17% and YTD performance 40.65%. The one year return was --57.77%.   

(Note: Most ETFs need to have AUM over $25M to be considered a success. Most losses of AUM are due to market conditions but that doesn't mean the ETF can survive in this condition  and not be folded in with another issue for example or even cease to exist.)

KWT Top Ten Holdings & Weightings

Data as of First Quarter 2012

  1. MEMC Electronic Materials Inc (WFR): 9.90%
  2. GT Advanced Technologies Inc (GTAT): 9.57%
  3. First Solar, Inc. (FSLR): 8.06%
  4. Trina Solar Limited ADR (TSL): 7.06%
  5. SMA Solar Technology AG (S92): 5.44%
  6. Gintech Energy Corporation (3514): 5.12%
  7. SolarWorld AG (SWV): 5.03%
  8. STR Holdings, Inc. (STRI): 4.56%
  9. LDK Solar Company, Ltd. ADR (LDK): 4.35%
  10. Yingli Green Energy Holding Company, Ltd. (YGE): 4.15%

#8: First Trust ISE Global Wind Energy ETF (FAN)

FAN follows the ISE Global Wind Energy Index which consists of companies exclusively involved in the wind energy business account for a 66% index weight. The fund was launched in June 2008. The expense ratio is .60%. AUM equals $30M with average daily trading volume of 20K shares. As of mid-February 2012 the annual dividend yield is 6.99% and YTD performance 6.19%. The one year return was -19.85%. 

FAN Top Ten Holdings & Weightings

Data as of First Quarter 2012

  1. EDP Renovaveis SA (EDPR): 7.99%
  2. Iberdrola SA (IBE): 7.06%
  3. China Longyuan Power Group Corp Ltd. (CLPXF): 6.85%
  4. Vestas Wind Systems A/S (VWS): 6.78%
  5. Nordex AG (NDX1): 5.96%
  6. Gamesa Corporacion Tecnologica, S.A. (GAM): 5.69%
  7. China WindPower Group Ltd. (CWPWF): 4.21%
  8. Arise Windpower AB (AWP): 3.91%
  9. Infigen Energy (IFN): 3.44%
  10. Fersa Energias Renovables, S.A. (13646301): 2.79%

#7: iShares S&P Global Clean Energy Index Fund (ICLN)

ICLN tracks the S&P Global Clean Energy Index. The fund was launched in June 2008. The expense ratio is .48%. AUM exceeds $38M and average daily trading volume is 28K shares. As of mid-February 2012 the annual dividend yield is 4.29% and YTD performance 17.56%. The one year return was -38.82%. 

ICLN Top Ten Holdings & Weightings

Data as of First Quarter 2012

  1. Energy Company of Minas Gerais ADR (CIG): 6.69%
  2. Hokuriku Electric Power Co Common Stock: 6.00%
  3. Energy Company of Parana ADR (ELP): 6.00%
  4. GCL-Poly Energy Holdings Limited (03800): 5.83%
  5. National Electricity Company of Chile, Inc. ADR (EOC): 5.43%
  6. Kyushu Electric Power Co Inc Common Stock: 5.28%
  7. GT Advanced Technologies Inc (GTAT): 4.72%
  8. China Longyuan Power Group Corp Ltd. (CLPXF): 4.72%
  9. EDP Renovaveis SA (EDPR): 4.60%
  10. Verbund AG (VER): 4.52%

#6: PowerShares Global Clean Energy ETF (PBD)

PBD follows the WilderHill Global Innovation Index which is distinguished marginally by an exposure to companies with technologies facilitating cleaner energy. The fund was launched June 2007. The expense ratio is .75%. AUM equal $93M and average daily trading volume is around 46K shares. As of mid-February 2012 the annual dividend yield is 1.43% and YTD performance 18.35%. The one year return was -32.08%. 

PBD Top Ten Holdings & Weightings

Data as of First Quarter 2012

  1. Contact Energy Limited (CEN): 2.05%
  2. Verbund AG (VER): 2.02%
  3. Enel Green Power S.p.A. (EGPW): 1.97%
  4. Ormat Technologies, Inc. (ORA): 1.96%
  5. Brookfield Renewable Energy Corp (BRPFF): 1.96%
  6. Energy Development Corp: 1.95%
  7. LSB Industries, Inc. (LXU): 1.94%
  8. Vestas Wind Systems A/S (VWS): 1.84%
  9. China Longyuan Power Group Corp Ltd. (CLPXF): 1.82%
  10. Xinjiang Goldwind Science & Technology Co., Ltd. (02208): 1.82%

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