Investors should take a look at clean energy sector exchange traded funds as renewable energy technologies experience rapid growth and greater adoption across the world.
Among the best performing non-leveraged ETFs of the past month, the Invesco WilderHill Clean Energy ETF (PBW) increased 16.3%, SPDR Kensho Clean Power ETF (NYSEArca: CNRG) advanced 15.2% and First Trust NASDAQ Clean Edge Green Energy Index Fund (NasdaqGM: QCLN) gained 11.4%.
A Bloomberg report showed that clean energy technologies saw $282.2 billion in funding in 2019, up 1% year-over-year, which suggested electric cars, offshore wind farms and energy storage devices will enjoy the biggest gains, Bloomberg reports.
The rising growth could drive further investment in clean energy capacity as governments bring down on greenhouse gas emissions, and investors look to opportunities in industries that benefit from going green.
Wind power is projected to break out after a 25% surge in installations on land to 69 gigawatts last year. More turbines are being installed in the U.S., China, Sweden, Norway and Spain, which should help compensate for a slight slip in offshore developments. Tom Harries, a BNEF wind analyst, argued that the trends should drive higher investment as well.
ETF investors can also target this segment of the renewable energy space through the thematic First Trust Global Wind Energy ETF (NYSEArca: FAN).
The renewable energy sector is growing more efficient with falling costs fueling increased installations and supporting a growing energy-storage businesses.
Furthermore, the going-green trend has also made seismic shifts in the automobile industry, with greater demand for electric vehicles. Looking ahead, Colin McKerracher, head of advanced transport at BNEF, pointed out that by this time next year, there will be 10 million electric vehicles on the world’s roads, compared to just 1 million five years ago. Year-overyear growth is expected to reach 20%, with China dominating sales and European demand rapidly rising.
For more information on the renewables space, visit our renewable energy category.