As more people explore methods to put their money to work in the current renewable energy sectors, clean energy exchange-traded funds have risen in popularity. These investments provide access to many sustainable energy companies, including those working with wind, solar, and other renewables. Investors seeking to put their money where their values are may find the best clean energy ETFs appealing due to their great performance records. Rising international consciousness of environmental issues and a subsequent move towards alternative energy sources have fueled rapid expansion throughout the clean energy sector in recent years. Hence, several exchange-traded funds (ETFs) focused on renewable energy have had massive capital inflows and stellar performance. These funds expose shareholders to well-established firms and promising newcomers in the renewable energy sector through a diverse portfolio of such firms.
This article will give you an overview of the top-performing clean energy ETFs, including information on their investment focus, top holdings, historical performance, and other important aspects. Before putting their money into any exchange-traded fund (ETF) focused on renewable energy, investors should think long and hard about their financial goals and their comfort level with risk.
iShares Clean Energy Exchange-Traded Fund (ICLN)
One of the biggest and most well-known best clean energy etfs is the iShares Global Clean Energy ETF. The fund follows the S&''P Global Clean Energy Index, which consists of 30 international firms engaged in clean energy and efficiency. Top holdings include Enphase Energy, Vestas Wind Systems, and First Solar, among others. ICLN's remarkable performance from its debut in 2008 has resulted in an annualized return of 18.35% as of January 31, 2023. In addition to the fund's comparatively low expense ratio of 0.46%, its AUM of over $10 billion has attracted significant investment in recent years.
Invesco Solar ETF (TAN)
Another well-known clean energy exchange-traded fund (ETF) with a niche in the solar sector is Invesco Solar ETF. This fund follows the MAC Global Solar Energy Index, which now includes 22 firms from all around the world that are engaged in solar energy. Investments in Enphase Energy, SolarEdge Technologies, and First Solar are some of the fund's top holdings. TAN has shown remarkable performance since its launch in 2008, with a cumulative return of 25.98% as of January 31, 2023. Although the fund's expense ratio of 0.69% is greater than ICLN's, it has attracted significant investment in recent years and now has more than $4 billion under management.
Global First Trust Wind Energy Fund (FAN)
One type of renewable energy exchange-traded fund (ETF) that zeroes focused on the wind energy sector is the First Trust Global Wind Energy ETF. The fund mimics the performance of the ISE Clean Energy Index, which consists of 45 firms active in the global wind energy sector. Vestas Wind Systems, Siemens Gamesa Renewable Energy, and Orsted are only a few of the leading holdings in the portfolio. As of January 31, 2023, FAN had returned an annualized 15.59% since its launch in 2008. The fund's expense ratio is modest at 0.62%, and it has had moderate investment flows in recent years, resulting in assets under management (AUM) of more than $1 billion.
Invesco WilderHill Clean Energy Exchange-Traded Fund (PBW)
The Invesco WilderHill Clean Energy Exchange Traded Fund (ETF) is a sector-spanning clean energy ETF that invests in businesses across the renewable energy, energy efficiency, and clean technology spectrum. The fund attempts to replicate the performance of the 43 firms that make up the WilderHill Clean Energy Index. Stocks in Enphase Energy, Tesla, and First Solar are among the fund's largest holdings. With an annualized return of 15.73 percent as of January 31, 2023, PBW has been a reliable investment vehicle for its shareholders since its debut in 2005. Even though the fund's expense ratio is 0.70 percent, it has attracted significant investment in recent years and has more than $4 billion in 
assets under management.
Low Carbon Energy ETF by VanEck (SMOG)
why are clean energy etfs down The VanEck Vectors Low Carbon Energy ETF is a clean energy exchange-traded fund (ETF) that invests in businesses working to reduce their carbon footprint through energy conservation, renewable resources, and other low-carbon technology. The fund attempts to replicate the performance of the Ardour Global Index Extra Liquid (AGIXLT), which consists of 30 global clean energy firms. Top holdings include Orsted, Enphase Energy, and NextEra Energy. With an annualized return of 15.34% as of January 31, 2023, SMOG has been a reliable investment since its launch in 2007. This fund has approximately $1.5 billion in assets under management (AUM) and a low-cost ratio of 0.63%, thanks to steady inflows over the past few years.
Conclusion
The fight against climate change is becoming increasingly urgent, and investors can benefit from exposure to this trend through clean energy exchange-traded funds. The top clean energy ETFs have provided impressive returns in the past and give investors access to a wide variety of businesses working in renewable energy and sustainability. Investors seeking a vehicle for doing so may find these products very attractive. But, before putting money into any renewable energy ETF, investors should think carefully about their investment goals and level of comfort with risk. Investors looking for long-term growth and exposure to sustainable projects may find these funds appealing in light of the sector's continuous expansion.
