Be Environment Friendly with Hot Clean ETFs

Global warming has been spreading fear far and wide just like terrorism. The louder the moan of panic, the more human awareness toward protecting the environment awakens. Probably this is why a specific day, June 5, has been chosen to commemorate the worth of our environment.

This World Environment Day is all the more important with the U.S. President Trump exiting the milestone Paris climate change agreement, which was signed by 195 countries in December 2015 (read: Trump Exits Paris Climate Deal: ETFs to Gain & Lose).

Global leaders assembled then in Paris at the COP 21 meet – which was the 21st annual conference of the parties. The goal was to curb global warming to a maximum limit of two degrees Celsius (read: Fight Global Warming with These ETFs).

Since the accord has thwarted the development of clean coal in America, Trump cited the deal as a threat to the economy and jobs. As per National Economic Research Associates, the existing accord in the Paris treaty would have cost America production cuts in several sectors.

Are Clean Energy ETFs at Risk on Trump Pullout?

While many opposed Trump’s decision, one thing is for sure that fighting against global warming is a social alert and the investing world also gives kind attention to it. As an eye-opener, economists have come up with the theory that global warming can “cause job losses, recessions and even a tumbling stock market.” 

This makes it all the more important for investors to be socially responsive while creating their investment portfolio. Plus, the cost of renewable energy has been lowered in recent years helped by Chinese investment and development, as per the source. This boosted chances of profitability for clean energy companies. Added to this, the number of coal mines declined globally in recent years, clearing the path for clean energy ETFs for the long run.

Against this backdrop, let’s take a look at clean energy or environment-oriented ETFs that are solid picks on World Environment Day (read: Sustainable Investing: What Is It and Why Is It Hot Now?).

ETF Picks

SPDR MSCI ACWI Low Carbon Target ETF LOWC)

The index picks stocks from developed and emerging markets that discharge lower carbons. The fund charges only 20 bps in fees. It is heavy on the U.S. which has half of total exposure, while Japan (7.7%) and the U.K. (5.9%) take the next two spots. The fund added about 1.1% on June 2, despite Trump’s decision to depart the Paris treaty.

PowerShares Cleantech ETF PZD

The 54-stock fund follows the Cleantech Index. The index is designed to track the leading cleantech companies, from a wide variety of sectors that offer the best investment returns. The fund charges 67 bps in fees. The fund has about 54.4% exposure to the U.S. followed by Switzerland (7.7%) and Denmark (6.1%). The fund was up over 1.1% on June 2.

PowerShares WilderHill Clean Energy ETF PBW

The underlying index of the fund is composed of stocks that are publicly traded in the U.S. and engaged in the business of advancement of cleaner energy and conservation. The fund charges 70 bps in fees. PBW was up about 0.5% on June 2, 2017.

Etho Climate Leadership US ETF ETHO

The underlying index is made up of about 400 companies with the most climate-efficient and socially responsible profiles within their respective industries. The fund charges 45 bps in fees. ETHO was up about 0.4% on June 2, 2017.

FlexShares STOXX Global ESG Impact ETF ESGG

The fund follows the STOXX Global ESG Impact Index. The index offers broad market exposure tilted toward global companies that score better with respect to a small set of environmental, social and governance characteristics. The fund charges 42 bps in fees. The U.S. has about half of the exposure to the fund followed by Japan (9.3%) and U.K. (8%). The fund advanced over 1.1% on June 2, 2017.

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PWRSH-W CL EGY (PBW): ETF Research Reports
 
ETHO-CLMT LEADR (ETHO): ETF Research Reports
 
PWRSH-CLEANTECH (PZD): ETF Research Reports
 
SPDR-MSCI ALC (LOWC): ETF Research Reports
 
FLEXS-ST GL ESG (ESGG): ETF Research Reports
 
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