Clean Energy Funds Beat the Market with Returns of Up to 37%
Clean energy investments are vastly out-performing the rest of the stock market, putting an end to the days when “green investing used to be synonymous with losing money,” Bloomberg reports.
While the Standard & Poors 500 Index is up 2% this year, clean energy exchange-traded funds (ETFs) are posting double-digit returns, writes analyst Eric Balchunas. “All 12 clean energy ETFs are beating the market, and their combined assets just topped $1 billion.”
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The Guggenheim Solar Energy Index ETF has grown 37%, while the Market Vectors Global Alternative Energy ETF is up 17%.
“This year’s run-up in clean energy ETFs highlights the volatility of these investments, which have had years of horrible underperformance,” Balchunas notes. “Even with the recent jump, both ETFs have underperformed the S&P 500 by more than 100% since 2009.”
But recent performance has been very strong, with China aiming for 17.8 gigawatts of new solar in 2015 and SolarCity doubling its installations in the first quarter of the year.
The “all-or-nothing performance” over the last half-decade “is common for ETFs focused on narrow themes,” Balchunas writes. “For investors who don’t want such a wild ride, there’s a less volatile option. The United Nations pushed for, and ultimately seeded, two low-carbon ETFs last year. The funds take a broad market index and remove a big portion of the carbon footprint from it,” rather than depending on young clean energy companies.