Exchange Traded Funds (ETFs)

A Lean, Green Alternative-Energy Machine

For investors looking to “go green,” the iShares Global Clean Energy ETF (NASDAQ:ICLN) may be a fund worth looking into. The fund, which was created in 2008, tracks a market-cap-weighted index of the 30 most liquid companies involved in businesses related to clean energy.

In this fund, “clean energy” is defined as companies involved in biofuels, ethanol, geothermal, hydroelectric and solar and wind industries. Not only does this portfolio consist of companies that produce energy in such a manner, but it also includes the companies that develop the technology and equipment used in the process.

ICLN has holdings that are both domestic and international, which gives investors access to clean-energy stocks around the world. Though this ETF may not be a core holding for most, it may be considered a savvy satellite holding, as it covers a corner of the market likely to do well during a green-energy-friendly Biden administration. With a new administration poised to reign in 2021, alternative energy stocks are gaining traction, as the coming year may be more focused on clean and renewable energy resources versus coal and oil.

For investors seeking more targeted exposure within the clean energy sector, ICLN provides multiple options for delving more deeply into renewable energy.

ICLN has an expense ratio of 0.46% and a dividend yield of 0.69%. It has $2.59 billion in assets under management and total net assets of $1.96 billion. More impressively, the fund’s year-to-date (YTD) daily total return is 92.13%.

Source: StockCharts.com

Unlike many big-name funds, ICLN has seen a gradual increase in both its 50-day and 200-day moving averages year to date. However, much like all other sectors, the fund saw a huge drop in mid-March, courtesy of COVID-19. Since that drop, it’s seen a great upward trend, surpassing its all-time high of $14.23 in February. As of today, it’s hit a new all-time high of $22.89 — a nice Thanksgiving bounty.

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ICLN’s holdings are primarily in three sectors: 52.33% in Utilities, 28.71% in Technology and 16.45% in Industrials. Its top five holdings include First Solar Inc. (FSLR), 5.28%; Xinyi Solar Holdings Ltd. (00968), 5.04%; Orsted A/S (ORSTED), 4.86%; Contact Energy Ltd. (CEN.NZ), 4.82% and Meridian Energy Ltd. (MEL.NZ), 4.82%.

In sum, the iShares Global Clean Energy ETF (NASDAQ:ICLN) may be an interesting option for investors looking to expand their secondary holdings and break into the clean-energy space. With a portfolio made up of not only companies using alternative energy sources, but also the companies working to develop the technology and equipment to harness it, there is a plethora of alternative-energy stock options, both domestic and international.

However, investors should always do their due diligence to determine if an ETF is appropriate for their portfolio strategy.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.