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Solar Powering Up: Clean Energy ETFs Gaining Momentum

A solar sector-related exchange traded fund is shining as investors bet that a Joe Biden presidency will fuel growth in the clean energy sector.

 

The Invesco Solar ETF (NYSEArca: TAN) was among the best performing non-leveraged ETFs of Tuesday, rising 4.1%. TAN also jumped 35.2% over the past month and surged 142.3% year-to-date.

 

Other broad clean energy plays were also gaining momentum. On Tuesday, the SPDR Kensho Clean Power ETF (CNRG) increased 3.0% and the iShares Global Clean Energy ETF (ICLN) advanced 2.4%.

 

Bank of America pointed out that solar and other clean energy stocks have been rallying as presidential candidate Biden rises in early polls as there could be more upside ahead from some of the key players in the space, CNBC reports.

 

The former Vice President previously laid out a $2 trillion sustainable infrastructure plan to pave the way for the U.S. power sector to be carbon free by 2035 and for the country to be carbon neutral by 2050.

 

“With increasing investor expectations of not just a potential Biden win but further upside for renewables tied to a Dem sweep at the Senate, we note broader expectations for the solar industry to benefit broadly,” Bank of America technical research strategist Stephen Suttmeier said in a recent note to clients. “On a relative price basis we have seen a very bullish rotation for clean energy relative to utilities on an upside breakout from a 9-year big base vs utilities.”

 

Given the sector’s record run, Suttmeier argued that there is “clear election upside,” but he also cautioned against increasingly higher investor expectations.

 

On the other hand, if President Donald Trump is re-elected, Trump could further provide assistance to the oil energy industry and curtail aid to clean energy. Trump has targeted Obama’s “Clean Power Rule,” which aimed to reduce greenhouse gas emissions from power plants and encouraged growth of solar and wind power, Reuters reports.

 

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