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Published on October 7th, 2013 | by Guest Contributor

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Solar Carries Alternative Energy Mutual Funds And ETFs To Strong Returns

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October 7th, 2013 by  

Originally published on the Roen Financial Report
by Harris Roen

Alternative energy MFs racked up extremely robust gains in the past year. Returns range from a low of 16%, to a high of 64% for a mutual fund that is heavy into solar investments. ETFs also did well, but returns are much more variable. They range from a loss of 34% for a carbon ETF, to more than doubling of a solar ETF.

Mutual Funds

MF_20130930-300x217Returns remain excellent for alternative energy MFs overall, with average mutual fund up 32.3% for the year. Not a single fund posted a loss in the past 12 months. All mutual funds are also up for three-month and one-month time periods.

The best performing mutual fund over several time frames (12-month, three-month, one-month and one-week) is Guinness Atkinson Alternative Energy (GAAEX), up over 64% for the year. This fund is strongly invested in solar, with top weighted holdings that include SunPower Corp (SPWR), JA Solar (JASO), ReneSola (SOL) and other solar winners.

Exchange Traded Funds

ETF_20130930-300x217Performance of alternative energy ETFs are better for the year than their mutual fund counterparts, up 36.1% on average. There is a wider range of returns, though, with three out of the 17 ETFs posting double-digit losses.

The best returning ETF is Guggenheim Solar (TAN), up an astounding 113.5% for the year! Though this solar ETF is trading at its best levels in over a year and a half, it is still far below levels it was trading at in the heady solar days of 2008. This suggests that the climb for this fund could continue far past current levels.

 Alternative Energy versus Other Sectors

Compared to other sectors of the economy, alternative energy mutual funds and ETFs have outperformed extremely well. According to Morningstar®, sectors on average returned 24%, far below annual returns for MFs and ETFs. It is interesting to note that alternative energy mutual funds and ETFs did much better than the volatile energy sector as a whole (four to five times better in fact).

sector_year

Monthly returns show even better comparative results. Alternative energy MFs and ETFs beat all the sectors without exception. Comparing the average of all sectors, mutual funds performed almost twice as well, and ETFs almost three times better.

sector_month

The easy money may have been made in September, led by extremely strong returns in solar. However, I still believe the mindful alternative energy investor is likely to do well in the long term.

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  • NRG4All

    My only concern is the political climate for renewables. In AZ, APS is trying to thwart residential PV and there are subsidies in the form of tax credits that could be eliminated based on political considerations from a dysfunctional government. Thus, the investment potential could change over night. There is some risk here that may not have anything to do with the value of the companies that are showing these returns.

    • Bob_Wallace

      I think wind and solar have grown enough that resistance at the political level will be nothing more than noise in the system. There may be individual states that screw things up for a while but the economics are such that they will be overridden.

      We’re seeing people on the right side of the political spectrum fighting for wind and solar rather than against it.

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