New Solar ETF Helps Spread Sector's Risk

Claymore Securities just listed the Claymore/MAC Global Solar Energy Index ETF(TAN Quote), and it seems to have potential. Solar has been an interesting place to invest because of the importance of the products and the wild volatility in both directions that is likely to continue for the foreseeable future.

It should be clear from the chart of the top three holdings, First Solar(FSLR Quote), Renewable Energy Corp. of Norway and Q-Cells of Germany, that the names underlying the fund are unambiguously volatile.

The fund really is global: China is the largest country represented in the fund, at 29.91%, followed by Germany at 29.01% and the U.S. at 26.33%. Still, ex-U.S., TAN invests in only five countries.

The methodology for index construction is to select from companies that "specialize in providing solar energy products and services," subject them to common liquidity screens and then weight them by market capitalization (actually a modified market-cap weighting so that no one company has too great a weighting). ...