Energy exchange-traded funds (ETFs) invest primarily in stocks of natural gas, oil, and alternative energy companies. The securities within an energy ETF's portfolio may include major energy companies such as NextEra Energy Inc. (NEE) and Duke Energy Corp. (DUK), as well as smaller, fast-growing companies in the energy sector. There are roughly 34 energy ETFs, excluding inverse funds, leveraged funds, and funds with less than $50 million in assets under management (AUM). Because energy ETFs cover a wide variety of businesses, regions, and risks profiles, they offer something for nearly every investor. The ETF approach means that investors can gain exposure to the industry without taking on the level of risk inherent in investing in any specific energy company.
The best energy ETF for Q3 2020 is the Invesco Solar ETF (TAN). Below, we'll take a look at the top 3 energy ETFs. All figures are as of May 12, 2020.
- Performance over 1-Year: 27.3%
- Expense Ratio: 0.71%
- Annual Dividend Yield: 0.28%
- 3-Month Average Daily Volume: 556,516
- Assets Under Management: $530.4 million
- Inception Date: April 15, 2008
- Issuing Company: Invesco
The best-performing energy ETF for Q3 is the Invesco Solar ETF. TAN is a multi-cap fund tracking the MAC Global Solar Energy Index. This fund offers investors access to a broad range of companies in the solar energy industry that provide raw materials, fabrication equipment and solar products. The portfolio has roughly 35 holdings. The top 3 holdings, which together account for more than a quarter of TAN assets, are Enphase Energy Inc. (ENPH), a maker of solar power components; Solaredge Technologies Inc. (SEDG), the maker of photovoltaic array systems; and First Solar Inc. (FSLR), the maker of solar panels.
- Performance over 1-Year: 26.1%
- Expense Ratio: 0.65%
- Annual Dividend Yield: 1.83%
- 3-Month Average Daily Volume: 59,224
- Assets Under Management: $172.2 million
- Inception Date: June 29, 2018
- Issuing Company: ALPS
ACES uses the CIBC Atlas Clean Energy Index as a benchmark, which enables the ETF to gain exposure to U.S. and Canadian companies focused on hydro, solar, wind, and other types of clean energy. The top holdings for this fund include Tesla Inc. (TSLA), the electric car maker; Enphase Energy; and Cree Inc. (CREE), the semiconductor and power equipment company.
- Performance over 1-Year: 25.6%
- Expense Ratio: 0.60%
- Annual Dividend Yield: 0.86%
- 3-Month Average Daily Volume: 112,500
- Assets Under Management: $177.7 million
- Inception Date: February 14, 2007
- Issuing Company: First Trust
QCLN utilizes the NASDAQ Clean Edge Green Energy Index as a benchmark. The multi-cap, blended ETF offers investors a deep and broad exposure to a variety of green energy sub-sectors, including solar energy, biofuels, advanced batteries, and photovoltaics. The current top holdings for QCLN include Tesla; Brookfield Renewable Partners LP (BEP.UN), the renewable power asset company; and Universal Display Corp. (OLED), the lighting product maker.