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Green ETFs & Stocks for Earth Day - ETF News And Commentary

For the last 45 years, April 22 has been celebrated as Earth Day. The day honors the importance of environmental conservation initiatives. Global warming has become a blazing issue, raising panic alarms across the globe. An increased access to renewable energy can thus be viewed as one of the vital conditions to save our planet.

While this seems an entirely socially responsive idea, the investment world might also want to take some interest in it. This is truer since many futuristic companies deal with earth compositions like sun, water and wind to produce renewable energy for a cleaner and healthier tomorrow.

Let's take a look at how green energy ETFs are doing on World Earth Day. In any case, an uptrend in the clean field is really necessary to keep the earth clean and green (read: 3 Best Performing ETF Sectors of Q1 2015 ).

2015 So Far Turns Out Greener for the Clean Energy Space

Normally, investors take notice of rising investment propositions out of which quick returns can be realized. The clean energy space fits that bill. Despite seeing a tumultuous run last year thanks mainly to the oil price carnage, clean energy ETFs bucked the sagging trend this year..

While a gradual recovery in the oil price lent a helping hand to these clean stocks, Barrack Obama's 'Climate Change Action Plan' has also done a lot in driving up the sector from last year's lows. The demand for renewable energy, in particular solar and wind, has been rapidly growing for electricity generation in the U.S.

The President's latest budget proposes the Congress to permanently extend tax credits for the solar and wind industry. The fiscal 2016 budget request includes a $7.4 billion fund for clean energy technologies, above the $6.5 billion enacted by the Congress for this year. The tax incentives for both solar and wind energy operators are likely to cost the government about $31.5 billion over a decade (read: Obama Budget Plan Drives Up These Sector ETFs ).

Added to the strength, Bloomberg recently noted that solar energy has never been the direct competitor of oil as the former is used more for electricity purposes while the later is inclined to transportation. Per U.S. Energy Information Administration (EIA) renewable electricity generation will grow 72% from 2013 to 2040. Solar photovoltaic (PV) technology will grow an average rate of 6.8% annually, thereby becoming the fastest-growing source for the generation of renewable energy.

The U.S. is not the only country to have put stress on renewable sources. The world's second-largest country China is also weighing this option. China has amplified its solar goal for 2015 to minimize greenhouse gas emission. In fact, the country was able to log a drop (by 2%) in carbon emission last year long after 2001. All these hint at the increasing activity at clean energy companies which have already given a lift to the space.

Notably, the solar power industry finds a place in the top 14% section of the Zacks Industry Rank while the water industry has made it to the top 30% suggesting bullish fundamentals for the green energy space in the coming months. Investors can play this winning trend via a host of clean energy ETFs on the occasion of Earth Day. We highlight three clean energy ETFs returning the most this year (see all alternative energy ETFs here).

iShares Global Clean Energy ETF ( ICLN )

This ETF tracks the S&P Global Clean Energy Index with 30 holdings and an asset base of about $86.2 million. ICLN has added the most this year in the clean energy space having gained about 30% (as of April 17, 2015).

In terms of geographical breakdown, China leads the list with over 44% exposure, while the U.S. holds the second spot with 21.1%. The fund charges investors 48 basis points a year in fees for the exposure.

Huge exposure to China is benefitting the fund big time as the nation pledged to cut carbon emissions by 2030 by installing more panels and raising the non-fossil fuel share of all energy (read: Green & Dirty ETFs to Watch on Clean Climate Push ).

PowerShares Global Clean Energy Portfolio (PBD)

This $72-million product again provides global exposure to stocks that focus on greener and generally renewable sources of energy as well as technologies that facilitate cleaner energy. This is done by tracking the WilderHill New Energy Global Innovation Index. Holding over 100 stocks in its basket, the fund adopts a widely spread-out portfolio. In terms of countries, the U.S. makes up about one-third of the basket. Expense ratio came in at 0.81%. The ETF is up over 14% so far this year.

Market Vectors Global Alternative Energy ETF (GEX)

This ETF tracks the Ardour Global Index, focusing on global companies that are primarily engaged in the business of alternative energy. The fund holds about 31 stocks in its basket with AUM of $90 million while charging 62 bps in fees per year. American firms dominate the fund's holding at 61% while China (11.5%) and Denmark (10.1%) round off the top three (read: A Primer on Alternate Energy ETFs ).

The product is tilted towards the top two firms - Vestas Wind Systems ( VWDRY ) and Eaton Corp ( ETN ) - making up for nearly double-digit allocation. The ETF is up over 13% in the year-to-date timeframe.

Look At These Stocks too

A few stocks also deserve close attention this Earth Day. As per the Environmental Protection Agency (EPA), these companies are the 'largest green power users'. While EPA disclosed a list of top 100 U.S. companies, we highlight a few stocks, using 100% or more green power as a proportion to total electricity uses.

Intel Corp. ( INTC ) tops the list using 100% green power as a percentage of total electricity uses and with annual power usage of over 3 billion of kwh. Microsoft Corp. ( MSFT ) trails Intel with 100% usage and annual consumption of $2.5 billion kwh. Though Kohl's Corp. ( KSS ) comes third with 1.53 billion of kwh energy usage, on percentage terms Kohl's surpassed the tech giants as this retailer uses 113% of green power.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

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ISHARS-GL CL EN (ICLN): ETF Research Reports

PWRSH-GLB CL-EY (PBD): ETF Research Reports

MKT VEC-GLBL AE (GEX): ETF Research Reports

INTEL CORP (INTC): Free Stock Analysis Report

MICROSOFT CORP (MSFT): Free Stock Analysis Report

KOHLS CORP (KSS): Free Stock Analysis Report

EATON CORP PLC (ETN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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