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A Clean Energy ETF for Green Investors

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·1 min read
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Investing in clean energy is a solid strategy for the long haul. Global economies are shifting to more sustainable energy sources and while it may not be a huge market today, that's likely to change.

Analysts from Allied Market Research project that by 2030, the renewable energy sector will be worth nearly $2 trillion – up from $881.7 billion in 2020, rising at a compounded annual growth rate of 8.4% until then.

That's a decent rate of growth for this decade. The challenge, of course, is not only in picking the best area to focus on but also which companies might be the best investments. An exchange-traded fund (ETF) is your friend when facing such complicated decisions. And the First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN) holds shares of companies that can benefit from the growing trend towards cleaner energy.

Electric vehicle makers NIO (NYSE:NIO) and Tesla (NASDAQ:TSLA) are among its top holdings but its holding are much broader than that. Enphase Energy (NASDAQ:ENPH) accounts for 7% of the fund's weight and its focus is on providing sustainable home energy solutions.

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According to the fund's website, the ETF has a 26% exposure to renewable energy, followed by just under 20% to automobiles and 13% to semiconductors. Regardless of how more sustainable energy shapes the future, the Clean Edge Energy Index Fund can be a good way to gain exposure to the sector.

Year to date, the ETF is down 4% but over five years it has delivered returns of more than 360%.

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