Joe Biden is all set to swear in as the 46th president of the United States, as declared by the Electoral College last week. The broader markets have been hailing this election outcome, as evidenced by the S&P 500’s and Nasdaq composite’s 1.6% and 3.2% gains, respectively, over the past five days…
The clean energy industry is poised to be the biggest beneficiary of the incoming administration, given Biden’s ambitious plans to make the U.S. a carbon neutral economy by 2050. Biden has also verbalized his intention to rejoin the Paris Accord to cooperatively combat one of the biggest threats to mankind. The Democratic Party’s victory in winning control of the U.S. Senate should act as a catalyst to this process because it suggests easier bill approvals.
While the U.S. is currently dealing with a mass COVID-19 vaccination drive, it is expected that the country’s economic recovery from the 2020 recession will be partly driven by growth in the clean energy industry. With hefty capital inflows and strong demand, the clean energy industry faces the prospect of sustainable growth over the long term.
ETFs such as First Trust ISE Global Wind Energy Index Fund (FAN – Get Rating), Invesco Solar ETF (TAN – Get Rating), ALPS Clean Energy ETF (APES) and Global X YieldCo & Renewable Energy Income ETF (YLCO – Get Rating) provide all-round exposure to the clean energy industry, covering all types of renewable energy. With Biden’s plans to make the U.S. a leading country driving the clean energy revolution globally, we think these ETFs should outperform the broader markets in the years to come.
As the name suggests, FAN invests 60% of its total assets in the “pure play” companies operating in the wind industry. Remaining 40% is allocated to companies that have more diverse operational structures that are linked to the clean energy industry. The fund has an MSCI ESG rating of AA, indicating strong governance and financial stability, with focus on environmental issues. In terms of peer rank, FAN is ranked in the 95th percentile within its peer group, reflecting its dominating position in the clean ETF industry.
With $484.80 million in assets under management, the ETF’s top holdings are Siemens Gamesa Renewable Energy, S.A. (SGRE), Vestas Wind Systems A/S (VWS) and Orsted (ORSTED). These three companies combined account for over 26% of FAN’s total portfolio.
FAN has an expense ratio of 0.62%, in line with its category average. The ETF has gained 73.7% over the past year and 65.3% over the past six months. FAN pays $0.20 in dividends annually, yielding 0.8% at its current price. Its four-year average dividend yield is 3.3%.
How does FAN stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
B for Peer Grade
B for Industry Rank
A for Overall POWR Rating.
In the 116-ETF Global Equities ETFs group, it is currently ranked #12.
TAN is focused exclusively on the solar energy sector. It invests in “pure play” and “medium play” solar companies. While the former generates more than two-thirds of its total revenue from the solar segment, medium play companies generated approximately one-third of their revenue from this segment. TAN has an MSCI ESG rating of A, reflecting a stable environmental, social, and corporate governance ecosystem.
TAN has an AUM of…
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