Energy Business

Opportunities & Risks In Clean Energy Funds (PBW, TSLA, SOLR, SQM, PPO, TAN, FSLR, MYBUF, TSL, SPWRA, GEX, CREE, ICLN, OEZVF, EOC, KWT, WFR)

Clean energy funds first sprung up in about 2005, with the PowerShares WilderHill Clean Energy Fund (NYSE: PBW). Others have followed, but for the most part these funds have fairly low assets under management and the market for the funds is relatively limited as demonstrated by the volumes.  The fall from grace after 2008’s alternative energy peak has not exactly been the greatest help in the world for these funds.

In addition to the PowerShares fund, we’ll take a quick look here at the Guggenheim Solar ETF (NYSE: TAN), Market Vectors Global Alternative Energy ETF (NYSE: GEX), iShares S&P Global Clean Energy Index Fund (NASDAQ: ICLN), and Market Vectors Solar Energy ETF (NYSE: KWT).

PowerShares WilderHill Clean Energy (NYSE: PBW) is a non-diversified index tracker. The largest of its 58 holdings is SunPower Corp. (NASDAQ: SPWRA) at 3%, followed by Tesla Motors Inc. (NASDAQ: TSLA), GT Solar International Inc. (NASDAQ: SOLR), Sociedad Quimica y Minera de Chile S.A. (NYSE: SQM), and Polypore International Inc. (NYSE: PPO). The fund’s market value is $448.7 million, and its 52-week range is $7.98-$11.42. PBW’s NAV is 9.00.

Guggenheim Solar ETF (NYSE: TAN) invests at least 90% of its assets in  stocks included in the MAC Global Solar Energy Index. It’s top five holdings are First Solar Inc. (NASDAQ: FSLR) at 14.38%, Hong-Kong listed GCL Poly Energy Holdings Ltd. at 8.99%, Meyer Burger Technology AG (OTC: MYBUF), Trina Solar Ltd. (NYSE: TSL) at 5.3%, and SunPower Corp. (NASDAQ: SPWRA). Assets under management total $165.2 million and the NAV at June 7th was $7.12. The 52-week range is $6.12-$9.16.

Market Vectors Global Alternative Energy ETF (NYSE: GEX) tracks the price and yield performance of the Ardour Global Index, and invests at least 80% of assets in stocks included in that index. The fund’s top five holdings are First Solar at 8.8%, Vestas at 8.37%, Cree Inc. (NASDAQ: CREE) at 6.21%, Enel Green Power SpA at 6.1%, and Iberdrola Renovables SA at 5.73%. The fund has $140.3 million of assets under management and its NAV is $19.22. The shares’ 52-week range is $17.81-$22.76.

iShares S&P Global Clean Energy Index Fund (NASDAQ: ICLN) tracks the price and yield performance of the S&P Global Clean Energy Index. The top five holdings are Germany’s Verbund AG (OTC: OEZVF) at 5.58%, Iberdrola Renovables at 5.47%, Empresa Nacional de Electricidad S.A. (NYSE: EOC) at 5.46%, China Longyuan at 5.44%, and SunPower at 5.4%. The fund’s net assets total $71.1 million and the NAV is $16.54. The shares’ 52-week range is $14.09-$19.00.

Market Vectors Solar Energy ETF (NYSE: KWT) is an index tracker for solar energy companies. It’s top five holdings are First Solar at 9.54%, MEMC Electronic Materials Inc. (NYSE: WFR) at 8.89%, Trina at 8.54%, SunPower at 6.35%, and Norway’s Renewable Energy Corp. ASA at 6.07%. The fund’s assets under management total just $29 million and its NAV is $10.55. The shares’ 52-week range is $9.04-$14.33.

Many of these funds (and their components) are down considerably and they are down so much against the 2008 peak-energy highs that many investors would rather not be reminded.  24/7 Wall St. has maintained for quite some time that many alternative energy investments may really just be leveraged oil bets in disguise.  These have not even lived up to that universally when oil rose.  Now investors will hope that the decommissioning of nuclear plants can be the next frontier for growth.  If not, global austerity measures may force solar projects to actually be evaluated on their real underlying costs basis just like other projects.

Paul Ausick