Not All Clean Energy ETFs Are Created Equal [Guggenheim Solar ETF, Market Vectors Glbl Alter. Engy ETF Trst]

Lastly, the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN) offers exposure to companies developing new clean technologies and renewable energy. This fund takes a similar approach as GEX in allocating to a broad mix of 46 stocks spread across multiple sectors and industries.

QCLN has gained 13% so far this year and is composed solely of small and mid-cap stocks based in the United States.   The lack of international exposure in this ETF offers a variant way to play the clean energy theme with a strictly U.S. focus.

The Bottom Line

Investing in niche sectors such as solar or clean energy offers a higher degree of risk than more traditional broad-based ETF. Nevertheless, this may be appealing to those that want to add a small allocation of their portfolio to a top momentum area of the market. If you do decide to invest, I recommend doing so with a risk management plan that defines your boundaries in the event the tide turns.

This article is brought to you courtesy of David Fabian from FMD Capital Management.

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