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.