Alternative Energy Mutual Funds Post Stellar Performance, ETFs Variable

by Harris Roen, Editor
Roen Financial Report
August 20, 2013

The Roen Financial Report closely covers the universe of almost 30 alternative energy Mutual Funds (MFs) and Exchange Traded Funds (ETFs). We use a proprietary ranking method to pick the best funds, looking at measures that include fees, risk, tax liability, and the financial health of individual holdings within each fund. Subscribers can see the complete list of green funds, including rankings and technical breakdowns, in both Excel and PDF format.



Alternative energy MFs have had stellar returns in the past three and 12 months, all showing gains in the double digits. ETFs have also done well on average, but returns are much more variable, as detailed below.


Mutual Funds

MF_20130820Returns remain excellent for alternative energy MFs overall, with annual returns ranging from 54.5% to 15.8%.The average MF is up 31.3% for the year, and not a single fund posted a loss in the past 12 months.

Three-month and one-month returns also look good—even the funds that did not make a gain are down less than 1%. One word of caution, though, is that all MFs are trading near the top of their 52 week range, which could mean a short-term pullback from here.



Exchange Traded Funds

ETF_20130820Performance of alternative energy ETFs are much more erratic than their mutual fund counterparts. Overall ETFs have done well, 14 out of 17 ETFs show gains for the year, and two funds, First Trust NASDAQ® Clean Edge® Green Energy Index Fund (QCLN) and Market Vectors Global Alternative Energy ETF (GEX) posted gains better than 50%. Three funds, however, had losses for the year, with iPath Global Carbon ETN (GRN) down almost 50% in the past 12 months. This exchange traded note, which tracks Barclays Capital Global Carbon Index Total Return, continues to reflect the global paralysis in carbon markets.

Having said that, GRN is up 33.5% over the past three months, and is up 56% from its lows of mid-April. This improvement signals confidence that the European Union is having success in addressing long-term carbon market issues. The gain also reflects a positive reaction to new Chinese emissions trading initiatives aimed at aiding troubled carbon markets

Guggenheim Solar (TAN) has done extremely well, up 77% for the year, owing to a recovery in solar stocks  that started at the end of 2012. Recent news from the trusted industry research group IHS Electronics & Media Market Intelligence contends that the improved margins that photovoltaic companies reported in the second quarter of 2013 should continue to increase. I expect the solar sector to hold strong for the rest of 2013.


Individuals involved with the Roen Financial Report and Swiftwood Press LLC do not own or control shares of any companies mentioned in this article. It is also possible that individuals may own or control shares of one or more of the underlying securities contained in the Mutual Funds or Exchange Traded Funds mentioned in this article. Any advice and/or recommendations made in this article are of a general nature and are not to be considered specific investment advice. Individuals should seek advice from their investment professional before making any important financial decisions. See Terms of Use for more information.


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