ETFs
Record year in clean energy highlights 2 ETFs
2023 was a record year for clean energy use, once again underscoring the global drive to reduce emissions. The transition highlights two exchange-traded fund (ETF) opportunities to capitalize on growth: Invesco Global Clean Energy ETF (PBD B+) and the Invesco WilderHill Clean Energy ETF (PBW B).
As published in a Yahoo News Report, more consumers used various energy sources daily in 2023, according to a report from London think tank Ember. Thirty percent of the electricity produced came from clean energy sources, such as wind and solar power.
Solar energy, in particular, accounted for the largest share of clean energy sources in 2023. The amount of solar energy added was double that of coal, making it the 19th consecutive year as a source of energy generation. fastest growing electricity sector. The Ember report adds that 2024 could bring an even greater increase in solar energy installations.
As mentioned, the emissions reduction target is a global initiative. The Ember report showed that a number of countries are collectively using more clean energy sources. And China, in particular, has seen the biggest increase in renewable energy.
“China added more renewable energy than any other country last year – 51% of new solar power and 60% of new wind power globally,” the Yahoo report confirmed. “China, the European Union, the United States and Brazil together accounted for 81% of new solar production in 2023.”
A global, small-cap option
To reflect the global transition to clean energy, PBD provides exposure to the Global Clean Energy Index, including both U.S. and international stocks in the underlying portfolio. As such, it is an ideal fund for investors who are also looking to further diversify their portfolio by investing outside of US borders.
Additionally, the PBD is diversifying into different types of clean energy – such as wind, solar and hydro – making it an attractive option for those looking to bet on a clean energy boom, but are not willing to bet concentratedly on a specific sub-sector.
PBW tracks the WilderHill Clean Energy Index, comprised of U.S. companies focused on cleaner energy and conservation. The fund is more growth oriented, focusing primarily on small-cap companies (over 80% of the fund’s holdings as of May 3).
The focus on small caps is further segmented through qualitative factors, providing investors with exposure to small caps, growth and value. Like PBD, it invests in a wide range of companies involved in various clean energy sources, adding sub-sector diversification.
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