Clean Energy Is the S&P 500’s New Boss: ACES Up 29% YTD

The headline number is true and a little stale. The ALPS Clean Energy ETF (NYSEARCA:ACES) hit a 52-week high in late May and was tracking roughly a 32% gain on the year at that peak, with one outlet pegging the fund at a 19.4% gain in May alone. Then came last week. ACES closed Friday at $38.13 after an 9% single-day drop on June 5, capping a 9% slide in a week that started at $41.93. Even after that flush, the fund is still up 18% year to date from a December 31 starting price of $32.41, against the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) at 8%.

So the magazine version is this. A $10,000 position in ACES on the last trading day of 2025 was worth about $13,250 at the May 29 peak and is worth about $11,765 now. The same $10,000 in SPY would be sitting at about $10,820. Clean energy is still the boss of the broad index in 2026, just less of a boss than it was nine trading days ago.

The mechanism, not the vibe

ACES is a broadly diversified clean-energy fund. The portfolio holds 37 positions spread across solar, wind, hydro, geothermal, energy storage, EVs, hydrogen, grid hardware, biofuels, and even superconductors, with a meaningful Canadian sleeve (Boralex, Northland Power, Brookfield Renewable, Ballard). The top of the book is unusually balanced for a sector ETF this concentrated in theme. Albemarle at 7.32%, Enphase Energy at 6.94%, and Brookfield Renewable Partners at 5.74% are doing different jobs (lithium, residential solar inverters, contracted renewable cash flows), which is part of why the fund went up the right side of a real macro tailwind rather than catching one stock’s draft.

That macro tailwind is specific and worth naming. US clean power added a record 50.3 GW of capacity in 2025, and the buildout is being pulled forward by data-center electricity demand rather than by climate sentiment. The structural piece behind that is the projected $1.4 trillion utility infrastructure upgrade through 2030, which an ETF Trends piece in February called "double the spending of the previous decade." Add a one-year US-China rare earth and critical mineral supply agreement signed last fall, and you have a setup where the inputs (lithium, magnets, panels) got cheaper and the demand (grid, storage, EV charging) got bigger at the same time.

The fund’s largest position, Albemarle, traffics in lithium. The second, Enphase, sells inverters into a residential solar market that lives or dies on tax policy. The third tier (Brookfield Renewable, Northland Power, Clearway, Ormat) is operating utilities that get paid for kilowatt hours, not vibes. That mix matters for the forward read, because each of those bets has a different exposure to what happens in the next 22 days.

The five-year hole the chart is climbing out of

ACES is down 42% over the past five years over five years, from a June 2021 price of $65.87 to today’s $38.13. Over the same window, SPY is up 75%. The fund is still well below its 2020 peak even after a 58% one-year gain. This is a recovery rally inside a deep drawdown, not a fund minting all-time highs.

That matters because the 2026 outperformance is partly a mean-reversion trade riding a real catalyst. The catalyst is the grid and the AI power thirst. The mean reversion is the part that ends when valuations re-rate to where the broad market is, which they have been doing for the last five months. Net assets stood at $113.1 million as of the February 28 NPORT filing, which tells you the fund is small enough to move on flows when sentiment shifts, and the 0.55% expense ratio is a real haircut against the index funds reading this article is being compared to.

The June 30 cliff and what to actually watch

Last week’s drawdown is the tell. There is one date on the calendar that explains why a clean-energy ETF would dump 9% in a strong week for the rest of the market. June 30, 2026 is the deadline for clean energy tax credits under the One Big Beautiful Bill Act (OBBBA), and the entire residential solar and EV subsidy stack feeds into names sitting near the top of this fund. Enphase, Sunrun, First Solar, Rivian, and Plug Power live downstream of that policy. Those five names together represent roughly 22% of net assets, with Enphase alone at 6.94%, Sunrun at 3.78%, First Solar at 3.93%, Rivian at 4.38%, and Plug Power at 3.29%.

If you want the playbook a thoughtful friend would hand you at the kitchen table, here is what it looks like.

Watch the policy outcome on or before June 30. Either the credits get extended in some form or the demand curve for residential solar installations and EV purchases contracts sharply for the back half of 2026. The fund’s top holdings split cleanly on this question. The utility-style names (Brookfield Renewable, Northland Power, Clearway, Ormat, HASI) get paid by long-term power contracts and grid spend, and they are largely fine either way. The hardware-and-subsidy names (Enphase, Sunrun, Plug, Rivian, Lucid) are the ones priced on whether the consumer or fleet buyer still gets a check from Washington.

Watch lithium. Albemarle is the single largest position at 7.32% of the fund, and the entire battery-storage and EV thesis routes through its price deck. A new lithium downturn pulls a quiet anchor on the fund regardless of what solar credits do.

Watch utility capex guidance for the back half. The $1.4 trillion grid number is a decade-long figure, and the pace at which utilities actually issue purchase orders for Itron meters, Shoals balance-of-system gear, and Array trackers is the real-time read on whether the structural story is converting into revenue. That conversion is what separates a 2026 rally that compounds from a 2026 rally that hands back its gains the way the last one did.

The read

The setup that produced this year’s outperformance is half durable and half regime-dependent. The durable half is the AI-driven power buildout, the utility upgrade cycle, and the rare earth supply deal, none of which reverse in three weeks. The regime-dependent half is the OBBBA credit window, and last week’s 9% drop looks like the market starting to price the worse outcome on that. The same fund that beat SPY by more than double on YTD basis through Friday is also the fund most exposed to a single calendar date that is now 22 days away. If you walk away with one thing, walk away with that asymmetry. The 2026 reversal is real, the mechanism is identifiable, and the next leg is going to be decided on June 30 by a vote in Washington rather than by anything you can read on a fund fact sheet.