This ETF Is Crushing The S&P 500

While the overall stock market has gotten beaten up in 2022, few sectors have actually performed well. 

One happens to be the clean energy sector. The Inflation Reduction Act passed by congress, with numerous subsidies and benefits for clean energy, should keep this sector rolling for months.

Trying to pick individual stocks in this market can be tricky, especially within a specific theme. That’s why ETFs are often a better choice. 

Our proprietary data shows the number one searched clean energy ETF by financial pros over the last month has been the iShares Global Clean Energy ETF (ICLN). 

It outperformed the S&P 500 over this year, as well as over the last five years. 

But can it keep the sun shining?

iShares Global Clean Energy ETF (ICLN) invests in a basket of stocks in the clean energy sector. It exposes investors to global equities in the solar, wind, and renewable energy sectors.

In addition, the ETF avoids companies that generate revenues from controversial weapons, small arms, and tobacco.  If a company generates more than 5% of its revenues from military contracting, thermal coal, oil sands, shale energy, arctic oil, and gas exploration, it is disqualified. 

Stocks in the ICLN ETF have the following sustainability characteristics:

ICLN is a weighted ETF investing in 98 companies. 

58.08% of the companies have a market cap of +$12.9 billion. At the same time, 31.78% of the stocks in the ETF have a market cap of +$2.7 billion. The rest of the ETF consists of small and micro-cap stocks. 

Here are more details about the companies in the ICLN portfolio:

• P/E Ratio 36.1x
• Equity Beta 1.1x
• Price/Book Ratio 2.8x
• 12-Month Trailing Yield 1.2%

The ICLN portfolio invests in many different sectors in the clean energy space. Below you’ll find the exposure breakdown:

These are the top ten holdings in the ICLN portfolio and their weighted distribution:

Despite the recent push towards renewable energy, ICLN has been trading since June 24, 2008. 

If you invested $10,000 in the ETF five years ago, it would be worth $24,985.

It has outperformed the SPDR S&P 500 ETF (SPY) over the last five years, returning 64.46%.

Trading ICLN

ICLN is an actively traded ETF, averaging more than 4.5 million shares daily. It’s also optionable, which gives traders many different ways to play it. 

Investing In ICLN

The ETF is reconstituted and rebalanced semi-annually. 

It charges an expense ratio of 0.40%, which is competitive in the ETF space. In addition, it pays an annual dividend to investors, which currently stands at $0.27, a yield of 1.25%. 

Alternatives To ICLN

While ICLN is the most popular clean energy ETF, investors do have other options, they include the Invesco WilderHill Clean Energy ETF (PBW), Invesco Global Clean Energy ETF (PBD), SPDR S&P Kensho Clean Power ETF (CNRG), and First Trust Nasdaq Clean Edge Green Energy Index Fund (QCLN). 

PBW charges a total expense ratio of 0.62%, which is notably higher than ICLN. However, it offers a more attractive dividend yield of 2.57%. Yet, PBW is down more than 23% this year compared to ICLN, which is up 0.52%. But over the last five years, it has returned 152.8%. There are 83 positions in the ETF, mainly consisting of small-cap growth stocks.

PBD charges an expense ratio of 0.75%, significantly higher than ICLN.  Its dividend yield is 1.35%. The fund is down 21.2% year-to-date.  However, it’s up 78% over the last five years. There are 139 stocks in the portfolio, mainly consisting of mid-cap and small-cap growth stocks. 

CNRG charges a competitive expense ratio of 0.45%. It offers investors a dividend yield of 1.31%. The ETF is up 4% this year and up 234% over the last five years. There are 46 positions in the fund, with its largest weighted holding being First Solar Inc. 

QCLN charges an expense ratio of 0.58%, which is higher than ICLN. While it does offer a dividend, it’s tiny, at 0.02%. The fund is down 6% year-to-date, but up 241% over the last five years. There are 62 positions in the fund, with Tesla being its largest weighted holding. 

Our Opinion 7/10

ICLN is a solid ETF with a rich history. The government is making a large push into clean energy with its Inflation Reduction Act, which should bode well for the stocks in the portfolio. We don’t think you can go wrong with ICLN, CNRG, or QCLN. 

Just make sure to get some exposure to the space because we believe it will be strong for the coming years.