The green energy revolution is accelerating, with renewable sources now generating over 40% of the world's electricity, driven largely by wind and solar. As the global shift toward low-carbon power intensifies, energy ETFs are becoming increasingly attractive, fueled by rising investments and favorable policy changes. This transition signals promising long-term growth for clean energy markets.
Amid this green energy revolution, investors might consider capturing strong energy ETFs, such as the Global X Renewable Energy Producers ETF (RNRG), iShares Global Clean Energy ETF (ICLN), and VanEck Low Carbon Energy ETF (SMOG).
Clean energy ETFs, once lagging behind oil and gas, are now gaining momentum. Recent strong returns, along with favorable geopolitical and economic factors, signal long-term growth potential. In 2024, solar, wind, and hydropower are projected to generate 22% of U.S. electricity, up from 21% in 2023, with an expected rise to 24% by 2025, further strengthening clean energy infrastructure.
According to the American Clean Power Association (ACP), the U.S. has invested $500 billion in clean energy over the past two years. This supports next-generation technologies, revolutionizing solar photovoltaic (PV) panels, hydroelectric power plants, advanced nuclear, and long-duration energy storage, making renewable energy viable alternatives to fossil fuels and paving the way for a sustainable future.
Additionally, electric vehicle sales have surged to record levels, contributing to renewable energy in the United States reaching an all-time high. These energy ETFs are increasingly appealing due to their diversification, lower risk, and focus on renewables. With growing investments and positive market trends, these ETFs present promising opportunities for long-term growth.
Given this favorable backdrop, let’s evaluate the three Energy Equities ETFs picks, starting with number three.
ETF #3: Global X Renewable Energy Producers ETF (RNRG)
RNRG is an exchange-traded fund launched and managed by Global X Management Company LLC. It invests globally in public equity markets, focusing on companies in utilities, hydroelectric power generation, solar and wind energy, alternative energy resources, biofuels, and renewable electricity producers. The fund invests in both growth and value stocks across various market capitalizations and seeks to track the performance of the Indxx Renewable Energy Producers Index using a full replication technique.
With $39 million in assets under management (AUM), RNRG’s top holding is PT Barito Renewables Energy Tbk (BREN) with a 7.43% weighting, followed by Centrais Eletricas Brasileiras SA-Eletrobras (ELET3), with a 6.55% weighting, and EDP Renovaveis SA (EDPR), with 6.51%. RNRG has a total of 42 holdings.
RNRG has an expense ratio of 0.65%, higher than the category average of 0.55%. It currently has a NAV of $10.61. Its fund inflows came in at $4.47 thousand over the past month.
The ETF pays an annual dividend of $0.15, which yields 1.45% on the current price. It has a four-year average dividend yield of 1.68%.
RNRG has gained 5.3% over the past six months and 1.4% over the past three months to close the last trading session at $10.31.
RNRG’s POWR Ratings reflect its promising prospects. The ETF’s overall B rating equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
RNRG has an A grade for Trade and a B for Buy & Hold and Peer. In the Energy Equities ETFs group, it is ranked #20 out of 46 ETFs. Click here to access all of RNRG’s POWR Ratings.
ETF #2: iShares Global Clean Energy ETF (ICLN)
ICLN is an exchange-traded fund launched by BlackRock, Inc., and managed by BlackRock Fund Advisors. It invests globally in public equity markets, targeting stocks of companies in utilities and clean energy sectors. The fund targets growth and value stocks across diverse market capitalizations and invests in companies deemed socially responsible and environmentally conscious. It aims to track the performance of the S&P Global Clean Energy Index using a representative sampling technique.
With $2.17 billion in assets under management (AUM), ICLN’s top holding is First Solar, Inc. (FSLR) with a 7.29% weighting, followed by Enphase Energy, Inc. (ENPH), with a 7.29% weighting, and Consolidated Edison, Inc. (ED), with 5.95%. It has a total of 104 holdings.
It has an expense ratio of 0.41%, lower than the category average of 0.55%. It currently has a NAV of $14.41. ICLN’s 5-day fund inflows came in at $1.43 million.
The fund’s annual dividend of $0.22 yields 1.52% on the current share price. Its four-year average yield is 1.07%. Moreover, its dividend payouts have increased at a CAGR of 12.4% over the past three years and 3.6% over the past five years.
ICLN has gained 3% over the past three months and 4.7% over the past six months to close the last trading session at $14.37.
ICLN’s POWR Ratings reflect this promising outlook. The ETF’s overall B rating equates to a Buy in our proprietary rating system.
ICLN has an A grade for Trade and a B for Buy & Hold and Peer. Within the same group, it is ranked #14. Click here to access all of ICLN’s POWR Ratings.
ETF #1: VanEck Low Carbon Energy ETF (SMOG)
SMOG is an exchange-traded fund launched and managed by Van Eck Associates Corporation. It invests in global public equity markets, focusing on companies in low-carbon energy sectors such as hydro, solar, wind, biofuels, fuel cells, lithium-ion batteries, alternative fuels, and electric vehicles. The fund includes growth and value stocks across diverse market capitalizations, promoting environmental responsibility. The fund seeks to track the performance of the MVIS Global Low Carbon Energy Index using a full replication technique.
With $143.30 million in AUM, the fund has 67 holdings. SMOG’s top holding is Tesla, Inc. (TSLA) with a 9.87% weighting, followed by NextEra Energy, Inc. (NEE) with an 8.98% weighting, and FSLR with 3.87%.
SMOG has an expense ratio of 0.61%, higher than the category average of 0.55%. It currently has a NAV of $107.72. Its fund outflows came in at $24.66 million over the past year.
SMOG’s annual dividend of $1.75 yields 1.63% on the current share price. Its four-year average yield is 0.81%. In addition, SMOG’s dividend payouts have increased at a CAGR of 167.3% over the past three years and 39.1% over the past five years.
SMOG has gained 8.9% over the past six months and 8.7% over the past three months to close the last trading session at $107.34.
SMOG’s strong outlook is reflected in its POWR Ratings. The ETF has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has an A grade for Buy & Hold, Peer, and Trade. It is ranked #6 in the Energy Equities ETFs group. To access all the POWR Ratings for SMOG, click here.
What To Do Next?
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ICLN shares were trading at $14.48 per share on Monday afternoon, up $0.11 (+0.77%). Year-to-date, ICLN has declined -6.39%, versus a 20.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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