Funds offer renewables reward, with less risk

Want to get in on the global shift towards renewable energy but not sure how? No problem – these funds can throw light on things.

A bright future beckons in renewable energy.

Want to get in on the global shift towards renewable energy but not sure which company or companies are best to invest in?

Exchange Traded Funds (ETFs) offer investors who may not be confident picking individual stocks the opportunity to invest in a wider group of companies in the renewables sector.

But while ETFs are the easiest way to cover the renewable sector, the past year’s performance shows Australian investors aren’t really ready to jump on the renewables bandwagon just yet.

So, just what are the three major ETFs in Australia focusing on the renewables sector and what is their focus to drive growth for their investors? We’re glad you asked.

The rock star

ETF Securities Battery Tech & Lithium ETF (ASX:ACDC) is arguably the star performer of the bunch. Launched in September 2018, ACDC tracks the performance of the Solactive Battery Value-Chain Index.

The index represents companies that are providers of electrochemical storage technology and producers of metals that are primarily used for the manufacturing of battery-grade lithium batteries. Among its top 10 holdings are Mineral Resources (ASX:MIN), US aerospace, defence and IT security company Lockheed Martin (NYSE: LMT) and Pilbara Minerals (ASX:PLS).

While it has been named one of Australia’s top performing ETFs in the past, returning 68.51% since its inception, ACDC has fallen ~11.11% return in the past year to ~$84.14.

The first clean energy ETF on ASX

The VanEck Global Clean Energy ETF (ASX:CLNE) launched in March 2021 and was the first clean energy ETF listed on the ASX.

CLNE tracks the S&P Global Clean Energy Select Index which measures the performance of 30 of the largest and most liquid companies with businesses related to global clean energy production, technology and equipment, from both developed and emerging markets.

Among its top holdings are US energy technology company Enphase Energy (Nasdaq: ENPH), Brookfield Renewable (NYSE: BEPC) and SolarEdge Technologies (Nasdaq: SEDG). CLNE has fallen ~16.75% in the past year to ~$8.60.

The one with Tesla in it

BetaShares Climate Change Innovation ETF (ASX:ERTH) aims to track the performance of an index comprising a portfolio of up to 100 leading global companies that derive at least 50% of their revenues from products and services that help to address climate change through the reduction or avoidance of C02 emissions.

Among holdings are clean energy providers, along with companies tackling green transport, waste management, sustainable product development and improved energy efficiency and storage.

Their top holdings include electric car maker Tesla (Nasdaq: TSLA), power management company Eaton Corp (NYSE:ETN) and American Water Works (NYSE:AWK).

The ERTH share price has fallen ~14.73% in the past year to ~$10.94.

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