by Susan J. Aluise | October 28, 2011 7:44 am
It’s not easy being green. Last year, solar energy exchange-traded funds (ETFs) were some of the hottest investments around. True believers touted the prospects of astronomical growth in such green technologies, both in the U.S. and in emerging markets like China. Solar and other alternative-energy ETFs were billed as a good way to cash in on sector growth as the global economy recovered and oil prices trended higher.
But today, not only are abundant new shale gas plays putting the squeeze on alternative-energy investments, a still-struggling global economy is causing many utilities to postpone decisions about renewable energy. Solar ETFs in particular took a hit on Tuesday, after First Solar’s (NASDAQ:FSLR[1]) ouster of CEO Rob Gillette. FLSR stock plummeted 24% on the news, the company scrambled to release third-quarter earnings a week early. While FSLR missed estimates and lowered guidance[2], the stock rebounded because the news wasn’t as bad as feared.
Still, a solar panel glut that’s expected to exceed market demand throughout next year doesn’t boost investor confidence in the sector — particularly in the wake of the $535 million Solyndra debacle[3].
Obviously, recent reversals in the sector will not cause the sun to set on solar energy ETFs. There is broad commitment in the U.S. to reduce reliance on foreign oil, and emerging markets like China will drive growth over the next five to 10 years. But solar panel supply that exceeds demand — as well as recent bad press in the sector — will hamper growth of these funds in the near term. Here are four solar ETFs that are powering down now:
The Guggenheim Solar ETF (AMEX:TAN[4]) tracks the performance of the MAC Global Solar Energy Index. First Solar is the top asset in TAN, comprising more than 19% of total holdings. That’s why this ETF has been on a wild ride this week — down 8% on Tuesday and up more than 11% on Thursday. It’s important to remember, though, at $3.66, TAN is still trading nearly 61% below its 52-week high of $9.16 in February. With a market cap of $82.06 million, TAN has a dividend yield of 0.77.
TAN’s one-year performance is –54.51%.
The Market Vectors Solar Energy ETF (AMEX:KWT[5]) aims to mirror the price and yield performance of the Ardour Solar Energy Index — First Solar accounts for 10.74% of the fund’s holdings, which is why KWT dropped 7% on Tuesday and gained 11% on Thursday. At $5.20, KWT is trading nearly 64% below its 52-week high of $14.33 in February. With a market cap of $13.25 million, KWT has a dividend yield of 1.24%.
KWT’s one-year performance is –58.54%.
The iShares S&P Global Clean Energy Index Fund (AMEX:ICLN[6]) is a more diversified green-energy fund that tracks the yield and performance of the S&P Global Clean Energy Index — which includes solar equities like GT Advanced Technologies (NASDAQ:GTAT[7]), as well as Covanta (NYSE:CVA[8]), which focuses on the waste-to-energy play. At $10.47, ICLN is trading nearly 45% below its 52-week high of $19 in April. With a market cap of $43.42 million, ICLN has a dividend yield of 2.83%.
ICLN’s one-year performance is -37.06%.
The Global Alternative Energy ETF (AMEX:GEX[9]) tracks the yield and performance of the Ardour Global Index and includes stocks like First Solar and Covanta. At $13.85, GEX is trading more than 39% below its 52-week high of $22.76 in April. With a market cap of $82.19 million, GEX has a dividend yield of 1.35%.
GEX’s one-year performance is -31.61%.
As of this writing, Susan J. Aluise did not hold a position in any of the investments mentioned here.
Source URL: https://investorplace.com/2011/10/4-solar-energy-etfs-losing-power-fslr-tan-kwt-icln-gex/
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