Let’s face it – not everybody wants to be a stock picker. Going the exchange traded fund (ETF) route can make investing so much simpler. And in a time when the sustainability movement is gaining traction, the iShares Global Clean Energy ETF (NASDAQ:ICLN) is particularly appealing and ICLN stock might deserve a place in your portfolio.
But is it really the right time to own this ETF? This is a valid question as the share price has declined considerably from its peak price.
It’s an understandable objection, but sometimes lower share prices are a good thing. Perhaps the renewables market’s strength can help propel ICLN stock back to its peak price and beyond.
So, let’s start with a quick analysis of the price movements of this green-energy-centric ETF.
A Closer Look at ICLN Stock
The inception date of the ETF is listed as June 24, 2008. So of course, it’s understandable that the share price declined sharply post-inception, since a global financial crisis ensued.
ICLN shares finally hit rock bottom in the summer of 2012 at $6 and change. From there it was a gradual climb upwards, with the shares reaching $12 in early 2020.
The onset of the novel coronavirus threw a wrench in the works, sending the share price back down to $8 and change.
There was a sharp recovery after that, though, as the shares topped out at a 52-week high of $34.25 in January of this year.
What’s concerning to some investors is the recent decline in the share price. By the afternoon of March 8, 2021, ICLN shares had fallen below $23.
So, are there reasons to believe that another share-price rebound might be in store?
Perhaps the most compelling argument in favor of a clean energy ETF would be recent changes to the U.S. government.
In 2021, the Democrats have a nominal majority in both chambers of Congress. Furthermore, President Joseph Biden has demonstrated a commitment to promoting renewable energy.
With members of his political party in the Senate and the House of Representatives on his side, Biden may be able to push through significant green energy legislation over the coming years.
Even beyond that, Biden has the power to enact executive orders and he’s already demonstrated his willingness to do so.
Not long ago, Biden signed executive orders to:
- Formally establish the White House Office of Domestic Climate Policy
- Direct “federal agencies to procure carbon pollution-free electricity and clean, zero-emission vehicles”
- Implement “steps to ensure that every federal infrastructure investment reduces climate pollution”
- Ensure that “steps are taken to accelerate clean energy and transmission projects under federal siting and permitting processes in an environmentally sustainable manner”
- Target “both significant short-term global emission reductions and net zero global emissions by mid-century – or before”
There are more executive orders that we could list here, but you get the idea.
Go Clean, Go Global
The point is that Biden and his party colleagues have, more or less, a clear runway to promote sustainability-focused initiatives.
In order to take a bullish stance on this, you’re certainly able to pick out a selection of stocks that offer exposure to the clean energy economy.
Not everybody wants to do this, or would even know where to start. That’s where the iShares Global Clean Energy ETF comes in.
According to the fund’s fact sheet, the fund offers exposure to companies producing energy from solar, wind and other renewable sources.
Plus, you can truly go global with this ETF as there are no stated boundaries in terms of geographic representation.
Furthermore, the fund managers aren’t ripping you off in terms of fees as the ETF’s expense ratio is a very reasonable 0.46%.
With the the iShares Global Clean Energy ETF, you’ll be able to take a position in a multiplicity of green-energy-focused electricity, electrical equipment and even semiconductor companies, all at once.
The Bottom Line
Currently, the U.S. government is poised to make major changes in the sustainable energy sector.
There’s an opportunity there for investors – one that can be capitalized on today as ICLN stock is trading at a recently discounted price.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.