10 Energy ETFs to Consider for Your Portfolio

ETF

Investors are jumping on the bandwagon to support businesses with green philosophies. Many of us recognize the need to get behind efforts to improve the health of the environment and the planet. If you’re looking for options to diversify your portfolio, green ETFs in the energy sector is a trending option among investors. Those with a heart for social responsibility are moving toward support of initiatives to clean up the mess we’ve created. ETFs provide exposure to the sectors without investing in a single company, offering greater protection from the ups and downs of the stock market. Here are 10 energy ETFs to consider for your portfolio.

1. iShares Global Clean Energy ETF

It’s listed under the ticker symbol ICLN. It’s one of the most diverse ETFs with 76 holdings distributed throughout a range of countries with $5.6 billion in AUM. It’s one of the largest green energy ETFs tracking holdings in biofuels, ethanol, geothermal, solar, wind, and hydroelectric companies. it provides investors with broad exposure to the clean energy sector of the industry. Many of the companies in the holdings list develop equipment and technologies for the green sector. The price-earnings ratio is 25 with a price-book ratio of 2.88 percent and an MER of 42 percent. If you’re comfortable with a higher cost for coming on board, it’s an ETF that provides a diversified and somewhat safer exposure for market ups and downs with its spread of holdings.

2. Invesco Solar ETF

The Invesco Solar ETF is listed under the ticker symbol TAN. It’s one of the riskier investments as it focuses on pure solar energy. It lacks diversity with its sole focus on solar energy. Although the volatility is higher with this ETF it also yields the potential for higher returns. It’s an investment option for those looking for a more aggressive approach to investing. The fund tracks a range of companies within the solar segment including equipment manufacturers, solar installers, financing divisions of the solar industry, materials production, and companies that develop solar technology. TAN maintains 52 holdings with an AUM of $2.7 billion and an MER of 0.66 percent.

3. First Trust Global Wind Energy ETF

The First Trust Global Wind Energy ETF gives investors exposure to companies within the wind energy sector with some diversification, balancing fifty percent of revenues of its holdings from activities related to wind energy. the ETF maintains 54 holdings with companies engaged in machinery and materials manufacture and distribution, electricity distribution, wind farm development and management, and other aspects of the wind energy industry. Each company has a market cap of a minimum of $100 million. The index is rebalanced every six months.

4. KraneShares Electric Vehicle and Future Mobility ETF

This ETF is listed under the ticker symbol KARS. The holdings of this ETF include companies that are involved in some aspect of the EV industry such as autonomous driving developers, charging stations, automakers, battery manufacturers, raw material producers for the EV industry, and more. It is one of the more diversified ETFs with top holdings in the lithium battery production industry including Ameperex Technology, Co, Lucis, and other holdings in the EV market. If you’re interested in getting broad exposure to the EV market, this is one of the better ETFs to give you a broad range of holdings across the industry.

5. First Trust Natural Gas ETF

Investopedia recommends FCG as one of the better ETFs in the energy sector with a composition of companies that generate their revenues from the exploration and production of natural gas and natural gas products. With the increasing demand for natural gas, this option has a high potential for generating solid returns. The expense ratio is 60 percent with performance over one year of 77.5 percent, an annual dividend yield of 1.58 percent, and net assets of $778.6 million. The top three holdings of the fund are EQT Corporation exploring hydrocarbon and providing pipeline transport, ConocoPhillips, and Occidental Petroleum.

6. iShares US Oil & Gas Exploration and Production ETF

This ETF tracks the Dow Jones United States Select Oil Exploration and Production Index. It gives investors exposure to companies actively engaged in the exploration, production, and distribution of oil and gas. The top three holdings for this ETF are EOG Resources, ConocoPhillips, and Pioneer Natural Resources Company. BlackRock Financial Management is the issuer of this ETF since May 1, 2006, with $909.5 million in assets under management and an annual dividend yield of 1.96 percent.

7. Invesco Dynamic Energy Exploration & Production ETF

This ETF is listed as PXE on the exchange. It is a fund that tracks the Dynamic energy Exploration & Production Intellidex Index with 30 US companies in its holdings that engage in exploration and production of natural resources including natural gas and oil. Factors affecting stocks chosen are based on quality, management action, earnings momentum, and price momentum. Top holdings of the ETF include Occidental Petroleum Corp, Valery Energy Corp, Devon Energy Corp, and other companies that engage in gathering and processing natural resources. Invesco is the issuer since October 26, 2005, with net assets of $285.1 million and an annual dividend yield of 1.69 percent.

8. Vanguard Energy ETF

US News suggests considering Vanguard Energy ETF with its ranking as the number one in the equity energy sector. It offers investors diversity with its top holdings of Exxon Mobil Corp, Chevron Corp, EOG Resoruces Inc., Marathon Petroleum Corp, Schlumberger Ltd, Pioneer Natural Resources Co, Occidental Petroleum Corp, Valero Energy Corp, and Williams Cos Inc. The vast spread over some of the largest energy producers, explorers, manufacturers, and distributors offers the safety of diversity.

9. Fidelity MSCI Energy ETF

The Fidelity MSCI Energy ETF tracks the MSCI USA IMI Energy 25/50 Index. Investments of the fund are directed toward assets in companies of the underlying index, representing the performance of the US equity market’s energy sectors. It’s a non-diversified fund that achieved a ranking of number three in equity energy ETFs with an excellent rating for costs, a good tracking error, and a typical bid/ask ratio. The top ten holdings are Exxon Mobile Corp, Chevron Corp, Conoco Phillips EOG Resources, Inc., Schlumberger Ltd, Pioneer Natural Resources, Phillips 66, Valero Energy, Marathon Petroleum Corp, and Occidental Petroleum Corp.

10. Energy Select Sector SPDR Fund TF

The Energy Select Sector SPDR Fund ETF tracks the Standard & Poor’s 500 Index. Its holdings include companies engaged in the exploration and production of energy including Chevron, ExxonMobil, and other companies that expose investors to energy equipment, exploration, production, and services. The five-year annualized returns averaged 2.7 percent as of January 31, 2022, with an expense ratio of 0.10 percent. It offers protection as a diversified fund that focuses on companies involved in various aspects of the energy sector.

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