Prepare for the Green Energy Boom With These ETFs

Canadian investors should look to funds like the Harvest Clean Energy ETF (TSX:HCLN), as the green energy space gears up for big growth.

The 2021 United Nations Climate Change Conference, also known as COP26, is set to conclude at the end of this week. Meanwhile, the Justin Trudeau-led Liberals have made a variety of policy promises to combat climate change in the years and decades ahead. Back in October 2019, I’d discussed how the sustained public push would fuel growth in this space. Today, I want to look at three exchange-traded funds (ETFs) that offers broad exposure to this fast-growing space.

The latest climate summit should inspire you to target the green energy sector

In 2010, solar and wind energy combined to make up a mere 1.7% of global electricity generation. This grew to 8.7% in 2020. That outpaced many projections that had been laid in the beginning of the decade. For example, the International Energy Agency (IEA) predicted that global solar generation would reach 550 terawatt hours in 2030. It hit that number by 2018.

Allied Market Research recently released a report on the global renewable energy market. It projected that this space would reach a valuation of $1.9 trillion by 2030 compared to $881 billion in 2020. That would represent a CAGR of 8.4% over the forecast period. Indeed, investors should be eager for exposure to this promising market.

Here’s a clean energy ETF to buy on the dip

Harvest Clean Energy ETF (TSX:HCLN) invests in a portfolio of the 40 largest Clean Energy Issuers selected from the Clean Energy Investible Universe. That includes equities listed in North America, Europe, and Asia. Meanwhile, the fund offers medium risk to prospective investors, according to its own quick facts.

Shares of this green energy ETF have dropped 16% in 2021 as of early afternoon trading on November 9. Moreover, the ETF is up 11% month over month. Some of the top holdings in this portfolio include the China-based firm China Longyuan Power Group, United States-based companies like Daqo New Energy, First Solar, and SolarEdge Technologies.

This ETF is trading in the middle of its 52-week range. It is worth snatching up at the time of this writing.

Don’t sleep on these green energy ETFs

BMO Clean Energy ETF (TSX:ZCLN) launched on January 20, 2021. It aims to invest in companies that are involved in clean energy-related businesses. This involves tracking the S&P Global Clean Energy Index. Shares of this green energy ETF have plunged 24% in 2021. Meanwhile, it is up 10% compared to the previous month.

Some of the top holdings in this ETF include Enphase Energy, Vestas Wind Systems, and Plus Power. This ETF has major room to run, as the green energy space is set up for big growth over the course of the 2020s.

iShares S&P/TSX Capped Utilities ETF (TSX:XUT) is the final green energy-related ETF I’d consider snatching up in the first half of November. It offers investors exposure to some of the top utility companies in Canada. Shares of this ETF have increased 4.3% in the year-to-date period.

This fund boasts nearly 20% overall exposure to renewable electricity. Moreover, investors will recognize some top green energy names like Algonquin Power & Utilities, Brookfield Renewable Partners, and Northland Power. Moreover, the ETF also offers a monthly distribution of $0.082 per share. Indeed, that represents a 3.2% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

Canada national flag waving in wind on clear day
Tech Stocks

Trump Trade: Canadian Stocks to Watch

With Trump returning to the presidency, there are some sectors that could boom in Canada, and others to watch. But…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Investing

Is Canadian National Railway Worth Buying for its 2.2% Dividend Yield?

Let's dive into whether Canadian National Railway (TSX:CNR) is a top buy for long-term investors at this point in the…

Read more »

nuclear power plant
Energy Stocks

Is Cameco Stock Still a Buy?

Cameco stock recently reported earnings that showed the Westinghouse investment is creating some major costs. But that could change.

Read more »

cloud computing
Dividend Stocks

Insurance Showdown: Better Buy, Great-West Life or Manulife Stock?

GWO stock and MFC stock are two of the top names in insurance, but which holds the better outlook?

Read more »

analyze data
Dividend Stocks

Here’s Why the Average TFSA for Canadians Aged 41 Isn’t Enough

The average TFSA simply isn't enough for most Canadians in their early 40s. Here's how to catch up.

Read more »

A plant grows from coins.
Dividend Stocks

The Smartest Dividend-Growth Stocks to Buy With $1,000 Right Now

New dividend-growth investors should consider CN Rail (TSX:CNR) stock and another top play if they're looking to build wealth over…

Read more »

concept of real estate evaluation
Dividend Stocks

How to Earn a TFSA Paycheque Every Month and Pay No Taxes on It

Canadian REITs can turn your TFSA into a monthly paycheque machine for life. Here's how Morguard North American Residential REIT…

Read more »

Start line on the highway
Investing

2 No-Brainer Growth Stocks to Buy Now With $5,000 and Hold Long Term

Market conditions today are ideal for growth investing, and two rising stocks are no-brainer buys in November.

Read more »