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Clean Energy vs. Fossil Fuel: ETF Showdown
8 Sep
Summary
- iShares Global Clean Energy ETF is cheaper with a 0.39% expense ratio.
- First Trust ETF focuses on fossil fuel and utility infrastructure.
- Funds offer distinct strategies for energy investment portfolios.
Two prominent exchange-traded funds (ETFs) offer investors contrasting strategies for navigating the energy sector. The iShares Global Clean Energy ETF (ICLN), launched in 2008, focuses on a global shift towards renewable energy technologies, holding 106 diverse positions. Its top holdings include First Solar and China Yangtze Power Ltd A. This fund has an expense ratio of 0.39% and provided a 1.1% dividend yield over the trailing 12 months.
Conversely, the First Trust North American Energy Infrastructure Fund (EMLP), established in 2012, targets the physical infrastructure of North America's fossil fuel and utility sectors. It manages 65 positions, with significant investments in Enterprise Products Partners L.P. and Energy Transfer LP. This actively managed fund has a higher expense ratio of 0.95%, with a trailing 12-month dividend yield of 2.8%.
The choice between these ETFs depends on an investor's portfolio goals, weighing the high-growth potential of green technology against the steady income derived from traditional utility operations. The notable difference in expense ratios—0.56 percentage points—is a significant consideration for long-term investment horizons.
