Download Equity: Global Renewable Energy

Equity:GlobalRenewableEnergy
142017
OVERVIEW
ETF.comInsight
TheGlobalRenewableEnergysegmentissomewhatfragmented,withafewfundsthattrytoeithercaptureasliceofthecleanenergyspaceor
theentirespace—andbeyond.Thebroadestfunds—PBW,ICLN,
QCLN,PBDandGEX—lookbeyondjustthepure-playsinthesolar,
wind,biofuelsandgeothermalindustries.Someincludenonpureplaycompaniesinvolvedinenergyconservation,efficiencyandclean
technology.Still,majordifferencesexistbetweenthem,including
weightingschemesandtheirglobalreach—PBWandQCLNareonly
eligibletoholdUS-listedsecurities.Meanwhile,TANandKWTonly
targetsolarenergycompanies,whileFANholdswindenergy
companies.TANmakestheOpportunitiesListforaccessible
exposuretosolarfirms.
evenseeminglysimilarfunds
“
mayusedifferentmethodologies
toproduceradicallydifferent
portfolios
”
PBWwasthefirstrenewableenergyETFtolaunchandisoneofthemostpopularfundsinthesegment.PBWearnsaplaceonthe
OpportunitiesList.
Generallyspeaking,renewableenergyETFsareontheexpensiveside.AsidefromICLN,whichcharges48bps,theremaining7fundscharge
60-75bps.Still,securities-lendingrevenueissignificantinthesegment(onstrongshortinterest)andseveralfundshavemanagedtobeattheir
indexeshandily,whichshouldbeconsideredwhendeterminingoverallcosts.
Tradingthefundscanbehardforretailinvestors.EvenforTAN,whichgetsthemoston-screenliquidity,averagespreadsarerelativelywide.
Limitordersaresuggestedforallthefundsinthesegment.
Importantly,evenseeminglysimilarfundsmayusedifferentmethodologiestoproduceradicallydifferentportfolios—besuretheETF’sdefinition
of“cleanenergycompanies”or“renewableenergycompanies”matchesyourexpectations.
FundName
Overall
Rating
TAN
GuggenheimSolarETF
F6
57
66
6
largeandliquid
FAN
FirstTrustGlobalWindEnergyETF
D31
72
39
31
Wind-energyonly
GEX
VanEckVectorsGlobalAlternative
EnergyETF
C30
90
45
30
sector-diverse
66
56
19
Lowestcost
69
47
18
Highestexpenseratio
Ticker
ICLN iSharesGlobalCleanEnergyETF
PBD
PowersharesGlobalCleanEnergy
Portfolio
Efficiency
D19
D18
Tradability
Fit
Notes
PBW PowerSharesWilderHillClean
EnergyPortfolio
C16
85
60
16
Mostpopularrenewable
energyETF
KWT VanEckVectorsSolarEnergyETF
F16
53
9
16
ExpensivetoTrade
QCLN FirstTrustNASDAQCleanEdge
GreenEnergyIndexFund
B12
92
64
12
US-Centic
YLCO GlobalXYieldCoIndexETF
N/AN/A
N/A
N/A
N/A
New;tradewithcare
SegmentAverage|RankedbyOverallScore
OpportunitiesList
P erformanceDispersion
1Month
3Month
YTD
1Year
3Years
5Years
10Years
Benchmark:ThomsonReutersGlobalRenewableEnergy
-0.39%
14.86%
26.80%
20.64%
3.51%
21.94%
--
QCLN
4.25%
9.39%
16.38%
26.76%
-1.22%
16.77%
-1.82%
GEX
1.85%
11.11%
18.06%
24.95%
-0.88%
17.02%
-6.12%
|Equity:GlobalRenewableEnergy|15June2017
Page1of4
PBW
3.18%
9.62%
15.88%
15.72%
-11.31%
2.48%
-13.06%
FAN
1.12%
11.12%
15.30%
17.54%
4.10%
20.96%
--
ICLN
-1.04%
0.23%
8.88%
7.26%
-6.74%
7.01%
--
PBD
1.82%
7.69%
13.17%
15.97%
-3.61%
11.22%
-7.10%
TAN
1.93%
3.82%
11.59%
-3.28%
-21.81%
4.65%
--
KWT
2.47%
4.10%
10.40%
-7.83%
-21.52%
2.24%
--
YLCO
3.10%
8.49%
12.95%
17.27%
--
--
--
RankedbyOverallS c ore|Performanc easof06/14/17.Allreturnsover1yearareannualiz ed.Allreturnsaretotalreturnsunless
otherwisestated.
EFFICIENCY
ETF.comEfficiencyInsight
Mostoftherenewableenergyfundsarereasonablyefficient,althoughtheyallcontendwithhigherexpenseratios.ICLNseparatesitselffrom
thepackincostwithalowfeerelativetoitssegment.The
remainingfundschragemore,soyoucanexpecttopayupregardless
ofwhichfundyouchoose.Interestingly,thelargerandmorepopular
funds—PBWandTAN—sitatthehigherendofthecostspectrum
Trackingisaninterestingstory
“
formanyrenewableenergy
funds ”
Trackingisaninterestingstoryformanyrenewableenergyfunds.
Severalofthefundshaveactuallymanagedtobeattheirunderlying
indexes,likelyviaacombinationofsecurities-lendingrevenueand
soundportfoliomanagement.TANistheextremecasehere,beatingitsindexbymorethan3%overmostrecent1-yearholdingsperiods.Inall,
5ofthe8ETFsinthesegmentoutperformedtheirindex.Thisoutperformanceislikelythefortunateproductofhighshortinterestinthe
segmentwhichproduceshighsecuritieslendingfeesforETFstoreapwhenofferingtheirportfoliosecuritiesforloan.
Allofthefundsinthesegmenthavesufficientassetstostaveoffclosureriskfornow—exceptone.KWT’slowassets,meagervolume,andother
factorscontributetothefund’shighriskofclosure.InvestorsconsideringKWTmaybebetteroffwithTAN.
Trac kingDifferenc e(12Month)
Ticker
Expense
Ratio
EfficiencyRating
Median
Max.
Upside
Max.
Downside
MaxLT/STCapGains
RateRule
LegalStructure
FundClosureRisk
QCLN
91
0.60%
0.51%
0.66%
0.13%
20.00%/39.60%
Open-EndedFund
Low
TAN
57
0.71%
2.25%
5.19%
1.44%
20.00%/39.60%
Open-EndedFund
Low
YLCO
0
0.66%
--
--
--
20.00%/39.60%
Open-EndedFund
High
FAN
71
0.60%
-0.99%
1.09%
-2.57%
20.00%/39.60%
Open-EndedFund
Low
GEX
89
0.62%
0.61%
0.98%
0.03%
20.00%/39.60%
Open-EndedFund
Low
ICLN
66
0.47%
1.39%
3.87%
1.07%
20.00%/39.60%
Open-EndedFund
Low
KWT
53
0.65%
1.51%
7.90%
0.57%
20.00%/39.60%
Open-EndedFund
High
PBD
68
0.77%
-0.00%
5.45%
-1.82%
20.00%/39.60%
Open-EndedFund
Low
PBW
84
0.70%
2.19%
2.61%
1.57%
20.00%/39.60%
Open-EndedFund
Low
SegmentAverage|RankedbyEfficiencyScore
|Equity:GlobalRenewableEnergy|15June2017
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TRADABILITY
ETF.comTradabilityInsight
Manyofthefundsinthissegmentholdsmall,internationalunderlyingsecurities.Asaresult,spreadsareabitwiderthanonemightexpect
fromachicsegmentlikerenewableenergy.Severalfundssee
impressivedailyvolumebutthespreadsevenonthemostliquid
fundswilldeterthosewhowishtotradewithahighdegreeof
frequency.
“ thesegmentisnotonefor
frequenttraders ”
Thesolar-focusedTANtakestheleadinTradability,butaverage
spreadsarestillsomewhatwide.InvestorsshouldalsofindampleliquidityinFAN,PBW,andQCLNallofwhichseeatleast$1Minvolume
mostdays.Investorswillneedtobealittlemorecautiouswithsomeoftheotherfundsthatseelightervolumesandsportwiderspreads.
Thebrightsideforalternativeenergyproponentsisthathalfofthemhaverobustblockliquidity,while3othersratemoderatelyhere.This
suggestsinvestorsshouldbeabletoefficientlytrademostofthefundsinbulk.Forretailinvestors,it'sreallyasegmentthat'sappropriatemore
forlong-termbuy-and-holdinvestors.
Ticker
MedianDaily
Volume($)
TradabilityRating
AverageSpread
Creation
Unit/Day
MarketHours
Overlap
Underlying
Volume/Unit%
CreationCost
PerUnit(%)
Impediment
toCreations
FAN
38 $395.23K
0.34%
0.58
35.00%
7.89%
0.15%
None
GEX
45
$251.9K
0.62%
0.08
70.00%
0.76%
0.03%
None
ICLN
56 $335.48K
0.41%
0.39
53.00%
0.59%
0.04%
None
KWT
9
$25.0K
3.36%
0.01
40.00%
2.31%
0.03%
None
PBD
46
$70.58K
0.39%
0.12
47.00%
0.25%
0.25%
None
PBW
60 $277.11K
0.49%
1.33
99.00%
0.27%
0.23%
None
QCLN
63 $196.49K
0.28%
0.23
100.00%
0.23%
0.06%
None
TAN
66
$1.84M
0.16%
1.27
64.00%
2.22%
0.03%
None
YLCO
0
$66.18K
0.71%
0.11
83.00%
2.37%
0.08%
None
SegmentAverage|RankedbyTradabilityScore
ETF.com/BlockLiquidity
GEX
QCLN
PBD
ICLN
PBW
TA N
FA N
KWT
YLCO
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
5
4
3
2
1
|Equity:GlobalRenewableEnergy|15June2017
This meas urement
s hows howeas yitis to
trade25,000s hares of
eachETF.
Page3of4
FIT
ETF.comFitInsight
The8fundsinthesegmentofferuniquetakesontherenewableenergyspace,withsomereachingwellbeyondjustrenewableenergy,and
otherstargetingonlyasub-sectorwithinthespace.PBW,PDB,
GEX,ICLNandQCLNgowellbeyondthetraditionalpure-playsolar,
wind,biofuelsandgeothermalcompanies,andincludefirmsinvolved
inenergyefficiencyandconservation.Meanwhile,TANandKWT
specificallytargetthesolarindustry,whileFANisfocused
exclusivelyonthewindenergyspace.
itiskeytonotjudgethefunds
“
inthissegmentbytheirFit
scores ”
Despitetheirultra-lowFitscores,GEXandICLNarethemost
straightforwardoftheglobalrenewableenergyfunds,withvanillamarket-cap-selectedandmarket-cap-weightedportfolios.Still,eventhose2
portfolioslookdifferent.Forexample,GEXallocatesamassiveportionofitsportfoliototheUS,comparedwithICLN.
QCLNisalsocapweighted,butit'sonlyeligibletoholdUS-listedsecurities,whichdiminishesitsglobalreachandnaturallymakesthefund
veryUS-centric.PBW,whichselectscleanenergycompanies,basedonaproprietaryselectionschemeandweightstheminatieredequalweightstructure,similarlyonlyholdsUS-listedcompanies—thisboostsPBW'sUSexposure.LikePBW,PBDalsoweightsitsconstituentsona
tiered,equal-weightedstructure,butPBDiseligibletoholdsecuritieslistedoverseas—infact,atleast1/2itsconstituentsmustbelisted
outsidetheUS,whichlimitsthefund'sUSexposure.
Ifyou'relookingfortargetedexposuretosolarenergy,TANorKWTareyour2options.Althoughthefundsaremostlysimilar,therearesome
smalldifferences.TANseparatespure-playsfromnonpure-playsinthesolarindustrybasedonrevenuesandweightsaccordingly,givingmore
exposuretosolarheavyweightslikeFirstSolar.KWTfollowsastraightcap-weightingschemeandcapsanyonesecurityat8%.
Thelastfund,FAN,istheonlyETFfocusingexclusivelyonwindenergy.Over1/3ofthefund'sweightingisallocatedtoelectricutilities.FANis
alsoveryEuropean-centric,withSpanish,DanishandGermancompaniesmakingupalargechunkofthefund'sweighting.FANisalsothe
largest-leaningETFofthegroup,withaweightedaveragemarketcapnearly10xtheotherfundsinthesegment.
Overall,thekeyistonotjudgethefundsinthissegmentbytheirFitscores,sincenoneofthefundseventriestocapturethebroadrenewable
energymarket.Instead,lookattheirmethodologiesandportfoliostofindtheoneyou'remostcomfortablewith.
©2017,ETF.com
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INFORMATION,PRODUCTSORSERVICESCONTAINEDHEREIN.PASTPERFORMANCEISNOTINDICATIVEOFFUTURERESULTS.
Dataprovider:
OpportunitiesList:ThisETFrepresentsauniqueoralternativetakeonthesegment,andinvestorsmaywanttotakeacloserlook.
AnalystPick:ThisETFwasselectedbyouranalystsasbestavailablechoicefortheaverageinvestorseekingexposuretothissegment.
|Equity:GlobalRenewableEnergy|15June2017
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