We highlight the 5 best clean energy ETFs, as measured by 1-year performance, through January 31, 2022. Learn more about the ETFs' short- and long-term performance, expenses, and holdings.
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What Are Clean Energy ETFs?
Clean energy ETFs are exchange-traded funds that provide investors with exposure to companies that produce energy from wind, solar, and other renewable resources. These ETFs may be actively-managed but most seek to passively track the performance of a benchmark index, such as the S&P Global Clean Energy Index.
As of this writing, there are 15 U.S.-traded clean energy ETFs on the market. The largest energy ETF in this energy sub-sector is iShares Global Clean Energy ETF (ICLN), with $4.8 billion in assets under management. Some investors choose clean energy ETFs as an alternative to other energy sector ETFs or they may choose the sector as part of an ESG investing approach.
Tip: Growth in clean energy markets has been significant in recent years and shows potential for record growth in 2022 and 2023. According to an energy research report published by S&P Global Market Intelligence, there are trends favorable to renewable energy growth, including capital expenditure expansion and existing grid transformation. With that said, expansion costs may still present challenges ahead.
How to Evaluate Clean Energy ETFs
Our list of top clean energy ETFs are ranked in order of the trailing 1-year return, as of January 31, 2022. When researching ETFs, investors are wise to consider more than short-term performance and also research long-term returns, expense ratio, holdings, and ratings.
Criteria used to evaluate the best clean energy ETFs include:
- Performance: 1-year return is the primary selection criteria for evaluating the performance of our list of best clean energy ETFs. Thus, ETFs that came to the market less than one year ago were ignored. When possible, investors are wise to review longer historical performance, such as 3-, 5-, and 10-year returns, before considering the purchase of an ETF.
- Expenses: A fund's expense ratio, or the cost of holding the ETF is an important criterion to review because ETFs in the same category often track the same or a similar index, which means that the one with the lowest expense ratio will generally outperform those with higher expenses.
- Structure: Most ETFs are structured as open-ended investment companies, as opposed to closed-end funds, or CEFs. An ETF structure may also be a grantor trust, a limited partnership, or an ETN.
- Objective: Only ETFs that primarily hold clean energy stocks were considered for our list. The search for the best clean energy ETFs was open to actively or passively managed funds. However, alternative objectives and strategies, such as inverse ETFs and leveraged ETFs, were ignored for this list.
- Portfolio holdings: Clean energy ETFs typically hold stocks of companies in the U.S. and around the globe that are in the clean energy sector, including the areas of solar, wind, geothermal, and hydroelectric power.
- Quant Ratings and Factor Grades: Seeking Alpha's Quant Ratings and Factor Grades can be used for evaluating stocks or ETFs. In this article, we share what are called, "Factor Grades," which provide letter grades for five "factors" - Momentum, Expenses, Dividends, Risk, and Asset Flows. To do this, Seeking Alpha compares the relevant metrics for the factor to the same metrics for the other ETFs in its asset class. The factor grades range from a high of A+ to a low of F.
5 Best Performing Clean Energy ETFs
To make our list of best clean energy ETFs for 2022, we measure the top performance for 1-year returns, through January 31, 2022. Investors should keep in mind that past performance is no guarantee of future results and that longer periods, such as 3-year, 5-year, and 10-year returns are important to review.
1. First Trust Global Wind ETF
First Trust Global Wind ETF (FAN) is an exchange-traded fund that seeks to track the investment results of the ISE Clean Edge Global Wind Energy Index. This index is designed to measure the performance of public companies throughout the world that are active in the wind energy industry.
- As of date: January 31, 2022
- 1-year Performance: -19.16
- Expense Ratio: 0.60%, or $60 annually for every $10,000 invested
- 30-Day SEC Yield: 1.39
- Average Daily Volume: 113,918
First Trust Global Wind ETF Performance
| 1-Yr Return | 3-Yr Return | 5-Yr Return | 10-Yr Return | |
| First Trust Global Wind ETF - NAV | -19.16 | 15.80 | 11.48 | 11.27 |
| ISE Clean Edge Global Wind Energy Index | -19.51 | 16.40 | 12.06 | 12.03 |
| S&P 500 Index | 23.29 | 20.71 | 16.78 | 15.43 |
The First Trust Global Wind ETF was able to edge out its benchmark for 1-year NAV performance but tracked below its index in all other time frames reviewed. This performance is normal for a fund that passively tracks its benchmark. Compared to the S&P 500, FAN underperformed in all periods reviewed through January 31, 2022.
A $10,000 investment in the SMH ETF, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $8,084
- 3 years ago: $15,528
- 5 years ago: $17,218
- 10 years ago: $29,092
First Trust Global Wind ETF Structure, Objective, and Holdings
- Inception Date: 06/16/2008
- Issuer: First Trust Advisors L.P.
- Ticker: FAN
- Primary Exchange: NYSE Arca
- Structure: Open Ended Investment Company
- Objective: Seeks to replicate as closely as possible the performance of the ISE Clean Edge Global Wind Energy Index.
FAN ETF Top 10 Holdings, as of January 31, 2022
- China Longyuan Power Group Corporation Limited (OTCPK:CLPXF)
- Northland Power Inc (OTCPK:NPIFF)
- Orsted A/S (OTCPK:DNNGY)
- Vestas Wind Systems A/S (OTCPK:VWDRY)
- Siemens Gamesa Renewable Energy, SA (OTCPK:GCTAF)
- EDP Renovaveis SA (OTCPK:EDRVF)
- Boralex Inc. (OTCPK:BRLXF)
- Engie S.A. (OTCPK:ENGIY)
- RWE AG (OTCPK:RWEOY)
- SSE Plc (OTCPK:SSEZY)
FAN ETF Seeking Alpha Quant Ratings
| Momentum | Expenses | Dividends | Risk | Asset Flows |
| D | B+ | B | C | D+ |
2. VanEck Low Carbon Energy ETF
VanEck Low Carbon Energy ETF (SMOG) seeks to replicate as closely as possible the price and yield performance of the MVIS Global Low Carbon Energy Index. The index includes, but is not limited to, renewable energy industries such as wind, solar, hydro, and electronic vehicles.
- As of date: January 31, 2022
- 1-year Performance: -21.45
- Expense Ratio: 0.50%, or $50 annually for every $10,000 invested
- 30-Day SEC Yield: 1.27
- Average Daily Volume: 6,158
VanEck Low Carbon Energy ETF Performance
| 1-Yr Return | 3-Yr Return | 5-Yr Return | 10-Yr Return | |
| Van Eck Low Carbon Energy ETF | -21.45 | 31.23 | 21.58 | 15.37 |
| MVIS Global Low Carbon Energy Index | -21.66 | 31.93 | 22.20 | 15.41 |
| S&P 500 Index | 23.29 | 20.71 | 16.78 | 15.43 |
The VanEck Low Carbon Energy ETF slightly outperformed its index for the 1-year NAV and tightly tracked slightly below the index in all other periods. SMOG also performed below the S&P 500 for the 1-year and 10-year returns, but it significantly outperformed the S&P 500 in the 3-, and 5-year returns, through January 31, 2022.
A $10,000 investment in SMOG, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $7,855
- 3 years ago: $22,600
- 5 years ago: $26,565
- 10 years ago: $41,776
VanEck Low Carbon Energy ETF Structure, Objective, and Holdings
- Inception Date: 05/03/2007
- Issuer: Van Eck Associates Corporation
- Ticker: SMOG
- Primary Exchange: NYSE Arca
- Structure: Open Ended Investment Company
- Objective: Seeks to replicate as closely as possible the price and yield performance of the MVIS Global Low Carbon Energy Index.
SMOG ETF Top 10 Holdings, as of January 31, 2022
- Iberdrola SA (OTCPK:IBDRY)
- Tesla Inc (TSLA)
- Nextera Energy Inc (NEE)
- Enel Spa (OTCPK:ENLAY)
- Nio Inc (NIO)
- Vestas Wind Systems A/S (OTCPK:VWDRY)
- Samsung Sdi Co Ltd (OTCPK:SSDIY)
- Orsted AS
- Xpeng Inc (XPEV)
- Lucid Group Inc (LCID)
SMOG ETF Seeking Alpha Quant Ratings
| Momentum | Expenses | Dividends | Risk | Asset Flows |
| D+ | D | D+ | D | D |
3. First Trust Nasdaq Clean Edge Green Energy ETF
First Trust Nasdaq Clean Edge Green Energy Index ETF (QCLN) is a passively-managed exchange-traded fund that seeks investment results that correspond generally to the Nasdaq Clean Edge Green Energy Index. The index includes clean energy industries, such as solar, wind power, advanced batteries, fuel cells, and electric vehicles.
- As of date: January 31, 2022
- 1-year Performance: -28.39
- Expense Ratio: 0.60%, or $60 annually for every $10,000 invested
- 30-Day SEC Yield: --
- Average Daily Volume: 363,373
First Trust Nasdaq Clean Edge Green Energy ETF Performance
| 1-Yr Return | 3-Yr Return | 5-Yr Return | 10-Yr Return | |
| First Trust Nasdaq Clean Edge Green Energy ETF | -28.39 | 43.87 | 30.05 | 19.04 |
| Nasdaq Clean Edge Green Energy Index | -28.02 | 44.35 | 30.40 | 19.00 |
| S&P 500 Index | 23.29 | 20.71 | 16.78 | 15.43 |
First Trust Nasdaq Clean Edge Green Energy ETF performs closely below its index, which is to be expected for a passively-managed fund. QCLN performed far below the S&P 500 index significantly above the S&P 500 for the 1- 3-, 5- and 10-year returns, through January 31, 2022.
A $10,000 investment in the QCLN ETF, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $7,161
- 3 years ago: $30,566
- 5 years ago: $37,201
- 10 years ago: $57,139
QCLN ETF Structure, Objective, and Holdings
- Inception Date: 02/08/2007
- Issuer: First Trust Advisors L.P.
- Ticker: QCLN
- Primary Exchange: Nasdaq
- Structure: Open Ended Investment Company
- Objective: Seeks investment results that correspond generally to the price and yield of the Nasdaq Clean Edge Green Energy Index.
QCLN ETF Top 10 Holdings, as of January 31, 2022
- ON Semiconductor Corporation (ON)
- Tesla, Inc. (TSLA)
- Albemarle Corporation (ALB)
- NIO Inc. ADR (NIO)
- Enphase Energy, Inc. (ENPH)
- SolarEdge Technologies, Inc. (SEDG)
- Wolfspeed, Inc. (WOLF)
- XPeng Inc. ADR (XPEV)
- Brookfield Renewable Partners LP (BEP)
- Plug Power Inc. (PLUG)
QCLN ETF Seeking Alpha Quant Ratings
| Momentum | Expenses | Dividends | Risk | Asset Flows |
| C- | D+ | C | F | D- |
4. iShares Global Clean Energy ETF
iShares Global Clean Energy ETF (ICLN) is the largest clean energy ETF, as measured by assets under management. The fund seeks to track the performance of an index composed of global equities in the clean energy sector. ICLN consists primarily of companies that produce energy from solar, wind, and other renewable sources.
- As of date: January 31, 2022
- 1-year Performance: -36.50
- Expense Ratio: 0.42%, or $42 annually for every $10,000 invested
- 30-Day SEC Yield: 1.20
- Average Daily Volume: 4,888,020
iShares Global Clean Energy ETF Performance
| 1-Yr Return | 3-Yr Return | 5-Yr Return | 10-Yr Return | |
| iShares Clean Energy ETF | -36.50 | 26.96 | 19.84 | 9.70 |
| S&P Global Clean Energy Index | -36.72 | 26.95 | 19.76 | 8.94 |
| S&P 500 Index | 23.29 | 20.71 | 16.78 | 15.43 |
The iShares Global Clean Energy ETF performance tracks closely to its benchmark index. Compared to the S&P 500 Index, ICLN performed far below the S&P 500 for the 1-year and 10-year returns, but it significantly outperformed the S&P 500 in the 3- and 5-year returns, through January 31, 2022.
A $10,000 investment in the ICLN ETF, made 1 year, 3 years, 5 years, and 10 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $6,350
- 3 years ago: $20,464
- 5 years ago: $24,718
- 10 years ago: $25,239
iShares Global Clean Energy ETF Structure, Objective, and Holdings
- Inception Date: 06/24/2008
- Issuer: Blackrock Fund Advisors
- Ticker: ICLN
- Primary Exchange: Nasdaq
- Structure: Open Ended Investment Company
- Objective: Seeks to track the investment results of an index composed of global equities in the clean energy sector.
ICLN ETF Top 10 Holdings, as of January 31, 2022
- Vestas Wind Systems (OTCPK:VWDRY)
- Enphase Energy Inc (ENPH)
- Consolidated Edison Inc (ED)
- Orsted (OTCPK:DNNGY)
- Solaredge Technologies Inc (SEDG)
- Plug Power Inc (PLUG)
- SSE PLC (OTCPK:SSEZF)
- Iberdrola S.A. (OTCPK:IBDSF)
- EDP Energias De Portugal S.A (OTCPK:EDPFY)
- Xinyi Solar Holdings Ltd (OTCPK:XISHY)
ICLN ETF Seeking Alpha Quant Ratings
| Momentum | Expenses | Dividends | Risk | Asset Flows |
| D+ | B- | D | D- | C+ |
5. SPDR S&P Kensho Clean Power ETF
The SPDR S&P Kensho Clean Power ETF (CNRG) is an exchange-traded fund that seeks to track an index of innovative companies in the U.S. and around the globe that are in the clean energy sector, including the areas of solar, wind, geothermal, and hydroelectric power.
- As of date: January 31, 2022
- 1-year Performance: -38.03
- Expense Ratio: 0.45%, or $45 annually for every $10,000 invested
- 30-Day SEC Yield: 1.39
- Average Daily Volume: 58,726
SPDR S&P Kensho Clean Power ETF Performance
| 1-Yr Return | 3-Yr Return | 5-Yr Return | 10-Yr Return | |
| SPDR S&P Kensho Clean Power ETF | -38.03 | 36.12 | NA | NA |
| S&P Kensho Clean Power Index | -37.99 | 36.33 | 28.29 | NA |
| S&P 500 Index | 23.29 | 20.71 | 16.78 | 15.43 |
The SPDR S&P Kensho Clean Power ETF performed tightly its benchmark for all periods reviewed. Compared to the S&P 500 Index, the CNRG ETF significantly underperformed for the 1-year return but outperformed in the 3-year return, CNRG does not have a track record for performance beyond three years, as of January 31, 2022.
A $10,000 investment in the CNRG ETF, made 1 year and 3 years ago, would be worth (as of January 31, 2022):
- 1 year ago: $6,197
- 3 years ago: $25,221
SPDR S&P Kensho Clean Power ETF Structure, Objective, and Holdings
- Inception Date: 10/19/2018
- Issuer: SSGA Funds Management
- Ticker: CNRG
- Primary Exchange: NYSE Arca
- Structure: Open Ended Investment Company
- Objective: Seeks to track an index of innovative companies in the U.S. and around the globe that are in the clean energy sector.
CNRG ETF Top 10 Holdings, as of February 17, 2022
- Enbridge Inc. (ENB)
- New Jersey Resources Corporation (NJR)
- General Electric Company (GE)
- Algonquin Power & Utilities Corp. (AQN)
- Consolidated Edison Inc. (ED)
- ReneSola Ltd. Sponsored ADR (SOL)
- ALLETE Inc. (ALE)
- Centrais Eletricas Brasileiras SA-Eletrobras Sponsored ADR (OTC:CEDWF)
- JinkoSolar Holding Co. Ltd. Sponsored ADR (JKS)
- Avangrid Inc. (AGR)
CNRG ETF Seeking Alpha Quant Ratings
| Momentum | Expenses | Dividends | Risk | Asset Flows |
| D | C+ | C | D- | D- |
Bottom Line
Clean energy ETFs can provide investors with broad exposure to companies in the renewable resources industry, such as wind, solar, hydro, and electronic vehicles. Clean energy stocks have produced high long-term returns but market risk for this energy sub-sector is generally higher than broader market indices, such as the S&P 500.