Top 10 Alternative Energy ETFs

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%

#5: Market Vectors Global Alternative Energy ETF (GEX)

GEX tracks the Ardour Global Index which follows global companies principally involved in the alternative energy business. The index is a rules-based, float adjusted index. The fund was launched May 2007. The expense ratio is .60%.

AUM is over $68M and average daily trading volume exceeds 40K shares. As of mid-February 2012 the annual dividend yield is 2.93% and YTD performance 15.31%. The one year return was also quite negative at -38.60%. 

GEX Top Ten Holdings & Weightings

Data as of First Quarter 2012
  1. Cooper Industries PLC. (CBE): 10.26%
  2. Enel Green Power S.p.A. (EGPW): 5.72%
  3. Kurita Water Industries Ltd. (KTWIF): 5.57%
  4. Vestas Wind Systems A/S (VWS): 5.02%
  5. Cree, Inc. (CREE): 4.98%
  6. Verbund AG (VER): 4.51%
  7. First Solar, Inc. (FSLR): 4.01%
  8. Polypore International, Inc. (PPO): 3.96%
  9. China Longyuan Power Group Corp Ltd. (CLPXF): 3.74%
  10. Itron Inc. (ITRI): 3.73%

#4: Market Vectors Uranium + Nuclear Energy ETF (NLR)

NLR follows the DAXglobal Nuclear Energy Index. The fund was launched August 2007. The expense ratio is .57%. AUM are now $96 million and average daily trading volume at 45K shares. As of mid-February 2012 the annual dividend yield is 11.66% (this may be subject to significant change) and YTD performance 13.01%. The one year return was -30.15%. 

NOTE: Japan's Fukushima plant disaster has hit the sector hard. Investors should remember while new nuclear plants will be difficult to permit ongoing servicing and construction of new plants will continue albeit with the latter at slower pace. Political risks are high in the sector and the attraction of the dividend yield may mislead as some companies "may" reduce these given the business slowdown.

NLR Top Ten Holdings & Weightings

Data as of First Quarter 2012
  1. Electricité de France S.A. (EDF): 8.56%
  2. Exelon Corp (EXC): 7.77%
  3. Mitsubishi Heavy Industries, Ltd. (7011): 7.48%
  4. Areva (AREVA): 6.47%
  5. Constellation Energy Group Inc (CEG): 6.27%
  6. Cameco Corp (CCJ): 5.53%
  7. Central Vermont Public Service Corporation (CV): 4.78%
  8. JGC Corp. (1963): 4.68%
  9. Denison Mines Corporation (DNN): 4.67%
  10. US Ecology, Inc. (ECOL): 4.66%

#3: PowerShares WilderHill Progressive Energy ETF (PUW)

 

PUW follows the WilderHill Progressive Energy Index which includes issues found within PBW but adds some fossil fuel bridge technologies aimed at cleaner use of these fuels. Additionally, some nuclear issues have been included. The issue was launched October 2006.

The expense ratio is .60%. AUM equal $50M with average daily trading volume around 10K shares. As of mid-February 2012 the annual dividend yield is .95% and YTD performance 17.80%. The one year return was -10.46%

Note : PUW has a more inclusive holding of alternative energy including nuclear for example. 

 

PUW Top Ten Holdings & Weightings

Data as of First Quarter 2012
  1. Enersis SA ADR (ENI): 2.37%
  2. Centrais Eletricas Brasileiras SA ADR (EBR): 2.34%
  3. Energy Company of Minas Gerais ADR (CIG): 2.31%
  4. Owens-Corning, Inc. (OC): 2.30%
  5. Cameco Corp (CCJ): 2.27%
  6. Johnson Controls Inc (JCI): 2.26%
  7. McDermott International Inc (MDR): 2.25%
  8. Methanex Corporation (MEOH): 2.25%
  9. Siemens AG ADR (SI): 2.24%
  10. Covanta Holding Corporation (CVA): 2.22%

#2: Guggenheim Solar ETF (TAN)

TAN follows the MAC Global Solar Energy Index which has a more global focus. It's constructed with constituents including ADRs, in all phases of the solar industry from developers, module manufacturers, marketing, selling and financing. The fund was launched April 2008. The expense ratio is .65%. AUM is roughly $63M and average daily volume is over 470K shares.  As of mid-February 2012 the annual dividend yield is 2.05% and YTD performance 22.29%. The one year return was -41.78%. 

Note: Effective February 15, 2012 TAN had a 10 for 1 reverse split as the share price had gotten too low for the sponsor.

TAN Top Ten Holdings & Weightings

Data as of First Quarter 2012
  1. GCL-Poly Energy Holdings Limited (03800): 13.19%
  2. First Solar, Inc. (FSLR): 11.70%
  3. GT Advanced Technologies Inc (GTAT): 7.37%
  4. Meyer Burger Technology AG (MBTN): 6.64%
  5. Trina Solar Limited ADR (TSL): 4.78%
  6. SMA Solar Technology AG (S92): 4.73%
  7. MEMC Electronic Materials Inc (WFR): 4.44%
  8. SolarWorld AG (SWV): 4.07%
  9. Suntech Power Holdings Co., Ltd. ADR (STP): 3.80%
  10. Yingli Green Energy Holding Company, Ltd. (YGE): 3.78%

#1: PowerShares WilderHill Clean Energy ETF (PBW)

 

PBW is based on the WilderHill Energy Index. It seeks to focus on green energy technologies generally from renewable sources of energy. It was launched March 2005 and I was pleased to interview Professor Wilder then.

It is the oldest of the alternative energy ETF issues. The expense ratio is .60%. AUM (Assets under Management) equal $212M and average daily trading volume is around 345K shares. As of mid-February 2012 the annual dividend yield is 2.05% and YTD performance 22.29%. The one year return was -41.78%. 

 

PBW Top Ten Holdings & Weightings

Data as of First Quarter 2012
  1. Amyris, Inc. (AMRS): 2.51%
  2. Solazyme Inc (SZYM): 2.48%
  3. EnerNOC, Inc. (ENOC): 2.37%
  4. Cosan Ltd (CZZ): 2.35%
  5. Air Products & Chemicals Inc (APD): 2.34%
  6. Universal Display Corporation (PANL): 2.32%
  7. Idacorp, Inc. (IDA): 2.32%
  8. Calpine Corp (CPN): 2.32%
  9. CPFL Energy SA ADR (CPL): 2.29%
  10. Aixtron SE NA ADR (AIXG): 2.28%

The following is our stars ranking procedure with a brief description of the ranking rationale:


Strong established linked index
Excellent consistent performance and index tracking
Low fee structure
Strong portfolio suitability
Excellent liquidity


Established linked index even if "enhanced"
Good performance or more volatile if "enhanced" index
Average to higher fee structure
Good portfolio suitability or more active management if "enhanced" index
Decent liquidity


Enhanced or seasoned index
Less consistent performance and more volatile
Fees higher than average
Portfolio suitability would need more active trading
Average to below average liquidity


Index is new
Issue is new and needs seasoning
Fees are high
Portfolio suitability also needs seasoning
Liquidity below average

Again, given nuclear disasters, politics and incoherent energy policies risks within this sector remain high.

As with any ETF sector remember the business interest of sponsors aren't necessarily aligned with your investment interests and objectives. Always keep this in mind.

New ETFs from highly regarded and substantial new providers are also being issued. These may include Charles Schwab's ETFs and Scottrade's Focus Shares which both are issuing new ETFs with low expense ratios and commission free trading at their respective firms. These may also become popular as they become seasoned. 

For further information about portfolio structures using technical indicators like DeMark and other indicators, take a free 14-day trial at ETF Digest . Follow us on Twitter and Facebook as well and join our group conversations.

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The ETF Digest has no current positions in the featured ETFs.

(Source for data is from ETF sponsors and various ETF data providers)
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of ETF Digest, Dave's Daily blog and the best-selling book author of Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management, published by Wiley Finance in 2008. A detailed bio is here: Dave Fry.