This year is expected to be the hottest year on record and the first in which average global temperatures exceed a 1.5-degrees-Celsius increase above pre-industrial levels — a critical marker in the seriousness of this global problem.
While some policymakers have shown less interest in sustainability given more pressing concerns about global supply chains and energy independence, clean energy remains a critical part of the global economic outlook in the coming years.
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The following clean energy exchange-traded funds, or ETFs, all allow investors to make broad and diversified bets on this long-term trend. That can be through solar and wind power specialists, utilities and distribution firms, and even tangential clean energy plays in the transportation or tech sectors:
| ETF | Assets | Expense Ratio |
| iShares Global Clean Energy ETF (ticker: ICLN) | $1.6 billion | 0.41% |
| First Trust Nasdaq Clean Edge Green Energy Index Fund (QCLN) | $618 million | 0.59% |
| First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index Fund (GRID) | $2.1 billion | 0.57% |
| Invesco Solar ETF (TAN) | $924 million | 0.67% |
| TCW Transform Systems ETF (NETZ) | $298 million | 0.75% |
| Invesco WilderHill Clean Energy ETF (PBW) | $325 million | 0.65% |
| SPDR Kensho Clean Power ETF (CNRG) | $172 million | 0.45% |
iShares Global Clean Energy ETF (ICLN)
Assets under management (AUM): $1.6 billion Expense ratio: 0.41%, or $41 annually on $10,000 invested
The most established clean energy ETF on Wall Street, this iShares fund boasts the largest daily volume and largest asset cache of any fund in the space. ICLN is popular because it takes a simple and diversified approach to clean energy investing, holding about 100 leading stocks from around the globe. Right now, it has about 25% of its portfolio in the U.S. via stocks like solar energy leaders First Solar Inc. (FSLR) and Enphase Energy Inc. (ENPH), and also top players in Europe like Spanish utility Iberdrola SA (OTC: IBDRY). Stocks in the portfolio span the full breadth of clean energy applications, from solar and wind power to utilities to specialized service providers, giving investors a one-stop way to play this energy trend.
First Trust Nasdaq Clean Edge Green Energy Index Fund (QCLN)
AUM: $618 million Expense ratio: 0.59%
QCLN is a focused clean energy ETF that has about 50 holdings. While it contains some of the same stocks as the prior fund, it is unique in that it puts more eggs in fewer baskets thanks to a shorter list of components. It’s also worth noting that QCLN takes a broader definition of clean energy technology and also includes electric vehicle manufacturers Tesla Inc. (TSLA) and Rivian Automotive Inc. (RIVN). That admittedly makes this investment a less direct play on electricity generation than some of the other clean energy ETFs out there, but if you want a diversified approach to the breadth of clean energy technology, QLCN is a unique fund worth a look.
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First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index Fund (GRID)
AUM: $2.1 billion Expense ratio: 0.57%
Rather than focusing on various generation technologies like solar or wind, GRID zeroes in on companies that are building out “smart grid” infrastructure. This is a critical part of the clean energy transition, as the intermittent nature of wind and solar requires upgraded ways to transmit and store power from renewable sources. This clean energy ETF holds companies including electric components giant Eaton Corp. PLC (ETN) as well as utilities like National Grid PLC (GRID) for a way to play the future leaders in distribution of clean energy.
Invesco Solar ETF (TAN)
AUM: $924 million Expense ratio: 0.67%
As you probably guessed from the name, this clean energy ETF from Invesco is focused solely on solar stocks. The focused portfolio is composed of about 40 solar stocks, with roughly half of its assets in U.S. companies such as Enphase Energy and First Solar and the rest allocated to firms overseas. China leads that international exposure, with about 23% of the portfolio represented by stocks like Xinyi Solar Holdings Ltd. (OTC: XISHY). This solar-centric approach comes with risk, given the specific focus on solar stocks as one segment of the clean energy future as well as exposure to smaller stocks in Asia and elsewhere. But for investors looking to tap into this important segment of clean energy, TAN is a go-to ETF.
TCW Transform Systems ETF (NETZ)
AUM: $298 million Expense ratio: 0.75%
Another fund taking a broad approach to clean energy, NETZ is an actively managed fund that invests in companies with a key role in the global energy transformation. A look at the portfolio may not make that strategy immediately apparent, however, with some less-obvious investments in the portfolio including Microsoft Corp. (MSFT), which offers specialized software and services to help firms manage clean energy generation systems. There’s also aerospace giant Airbus SE (OTC: EADSY), which is working on the next generation of low-emission aircraft, and waste and recycling giant Republic Services Inc. (RSG). The energy side of this clean energy fund is decidedly less prominent, but it’s worth exploring as a diversified ETF to play the move toward a more sustainable global economy.
Invesco WilderHill Clean Energy ETF (PBW)
AUM: $325 million Expense ratio: 0.65%
Another clean energy ETF to consider is this Invesco fund that currently holds about 70 positions. Those include straightforward clean energy plays like solar specialist JinkoSolar Holding Co. Ltd. (JKS) and biogas and hydrogen fuel player Bloom Energy Corp. (BE). It also holds less direct companies like electric vehicle charging network EVgo Inc. (EVGO). Like several other clean energy ETFs out there, this fund offers investors a way to look broadly at both power generation and next-gen stocks that are pushing forward with unique new green technologies.
SPDR Kensho Clean Power ETF (CNRG)
AUM: $172 million Expense ratio: 0.45%
One of the smaller clean energy ETFs out there, CNRG offers its own unique a mix of clean power companies like GE Vernova Inc. (GEV), a newly independent company spun off of parent GE in 2024 to focus solely on sustainable energy and wind power, as well as indirect plays like Tesla. Only about 45 total companies are in the portfolio, but the makeup is pretty diverse, with no single position representing more than 5% of the portfolio. And while about 90% of assets are in domestic stocks, there is still modest exposure to international names like China-based solar specialist Daqo New Energy Corp. (DQ).
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7 Clean Energy ETFs to Buy Now originally appeared on usnews.com
Update 12/13/24: This story was previously published at an earlier date and has been updated with new information.
