Exchanged-traded funds (ETFs) are usually known for their stability and long-term appeal. However, that doesn’t mean that investors aren’t able to earn good returns from holding them in their portfolios.
Invesco Solar ETF (NYSEArca:TAN) has had a terrific showing on the markets this year, rising 50% since the beginning of January. The fund, as its name suggests, invests in the solar energy industry. It’s very balanced, global ETF with the bulk of its holdings being in the U.S., where 46% of its holdings are based and 24% being in China.
Its top holding, SolarEdge Technologies (NASDAQ:SEDG), has risen 127% this year and is a big reason that the ETF is doing so well as it makes up 9.4% of the fund’s total holdings.
The next largest holding, at 8.9% is First Solar (NASDAQ:FSLR), which has had more modest gains of 30%. However, that’s still better than the 26% returns that the S&P 500 has generated over the same period.
Of the different sectors that Invesco Solar holds, more than 56% is in technology, 30% in utilities, 9% in industrials and 5% in real estate.
The fund’s expense ratio of 0.7% is inline with what other ETFs charge and it’s very minimal given the great returns that the ETF has produced thus far. It also provides investors with a modest yield of 0.46%.
Although the fund has done very well this year, it is a volatile holding with a beta of 1.2 and over five years the ETF is actually down 20%. But for investors who are bullish on solar energy, this could be a good long-term hold.