Every year, Earth Day reminds us the significance of keeping our planet clean and demonstrates support for environmental protection. The theme of the 51st Anniversary of Earth Day this year is “Restore our Earth,” which focuses on restoring global ecosystems through natural processes and emerging green technologies.
The United States has been at the forefront of making the climate clean with President Joe Biden’s pledge to go greener. The President has vowed to address climate change by creating green energy jobs and building out a “modern and sustainable infrastructure” to reach a carbon-free energy sector in the United States by 2035. He plans to pump $2 trillion into green energy over four years to build solar panels, charging stations and more, and aims for net-zero emissions by 2050. Biden also rejoined the Paris Climate Act (read: A Complete Guide to Clean Energy ETFs).
Additionally, Biden accelerated the transition toward electric vehicles (EV) to fight climate change. The latest $2 trillion infrastructure plan includes spending up to $174 billion to encourage Americans to switch to cars and trucks that run on electricity, not gasoline or diesel. Electric cars have got a lot of attention in recent years but remain a niche product, making up just 2% of the new car market and 1% of all cars, sport-utility vehicles, vans and pickup trucks on the road.
Other countries are also making progress to protect the Earth by deep carbon cuts. China aims to go carbon neutral by 2060 while the United Kingdom has set the world’s most ambitious climate change target of cutting emissions by 78% by 2035 from the 1990 levels. The European Union pledged to cut carbon emissions by at least 55% by 2030 compared with the 1990 levels. Further, a number of firms across the globe have been investing heavily in clean tech business.
In order to tap this booming trend, many investors are looking to eliminate carbon exposure from their portfolios and invest in cleaner alternatives on Earth Day. For them, we have highlighted several ETFs that could make for excellent portfolios for the long term:
Etho Climate Leadership US ETF ETHO
This is the first diversified, fossil-free, sustainable and responsible U.S. ETF that invests in the companies that are more climate efficient and ESG sustainable than their peers by tracking the Etho Climate Leadership Index. It holds a broad basket of 266 securities that are well diversified across components with none holding more than 0.82% share. The product has amassed $157.4 million in its asset base while trades in an average daily volume of around 11,000 shares. It charges 45 bps in annual fees from investors.
Invesco WilderHill Clean Energy ETF PBW
This ETF offers exposure to companies that are publicly traded in the United States and engaged in the business of advancement of cleaner energy and conservation. It follows the WilderHill Clean Energy Index and holds 68 stocks in its basket. The product has amassed $2.1 billion in its asset base and trades in a solid volume of around 861,000 shares a day. It charges investors 70 bps in fees per year.
Global X CleanTech ETF CTEC
This ETF follows the Indxx Global CleanTech Index and seeks to invest in companies that stand to benefit from the increased adoption of technologies that inhibit or reduce negative environmental impacts. This includes companies involved in renewable energy production, energy storage, smart grid implementation, residential/commercial energy efficiency, and the production and provision of pollution-reducing products and solutions. Holdings 40 securities in its basket, CTEC has amassed $161.1 million in its asset base since its debut last October and charges 50 bps in annual fees. It trades in an average daily volume of 131,000 shares (read: Top-Performing ETFs of Last Week).
VanEck Vectors Low Carbon Energy ETF SMOG
This ETF tracks the Ardour Global Index Extra Liquid, which focuses on the performance of low carbon energy companies primarily engaged in alternative energy, including power derived principally from bio-fuels (such as ethanol), wind, solar, hydro and geothermal sources and also includes the various technologies that support the production, use and storage of these sources. It holds about 33 stocks in its basket with AUM of $284.9 million while charging 62 bps in fees per year. The product trades in an average daily volume of 14,000 shares.
Global X Autonomous & Electric Vehicles ETF DRIV
This fund seeks to invest in companies involved in the development of autonomous vehicle technology, electric vehicles, and EV components and materials. It follows the Solactive Autonomous & Electric Vehicles Index, holding 76 securities in its basket. The product has AUM of $904.4 million and charges 68 bps in annual fees. It trades in an average daily volume of 641,000 shares (read: ETFs to Win on Biden’s Infrastructure Plan).
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