Green ETFs for Green Investors

Most investors – green investors and traditional investors alike – begin their investing career investing in exchange traded funds (ETFs). Unlike traditional mutual funds, the green ETFs are quoted on stock exchanges and sold and bought just like stocks. Furthermore, most of the green ETFs are passively administered which means their expense ratio is much lower than the expense ratio of a green mutual fund is.

During the last years, the finance sector has provided investors many interesting green ETFs. Most of them try to replicate the performance of some predefined sector index. Thus the green investor must pay close attention to the holdings of the index, as the performance of the ETF is to a high degree defined by the choice of the index.

Most of the interesting green ETFs invest in renewable energy. In addition, there are ETFs for water sector, cleantech and transport, for example. Some green investors might include even nuclear energy ETFs in their portfolio.

So far, I have introduced quite a few interesting exchange traded funds in this blog. Like most of the green investors, I am interested in the alternative energy sector, as the global need for new energy resources seems to continually grow. As the world’s population grows and the developing nations consume more and more energy, the traditional oil, gas and coal cannot satisfy the global needs. Thus it is necessary to look into alternative and renewable energy resources.

Some of the renewable energy ETFs invest in only one energy sector. Thus there are exchange traded funds for both solar energy and wind energy. As far as I know, there are no ETFs that invest in only geothermal energy. There are, however, alternative energy ETFs which invest in all forms of clean energy and include geothermal stocks in the holdings. These ETFs (e.g. PowerShares Clean Energy, PBW) offer a more diversified portfolio than those investing only in solar energy, for example. Thus they should not be as risky as solar energy ETFs are.

Green chips

Green chips

A green investor should consider many other ETFs besides renewable energy ETFs for the investment. One possibility would be to invest in some of the clean tech ETFs. PowerShares Cleantech ETF (PZD) is one of the interesting tech ETFs. Furthermore, there are ETFs like Market Vectors Environmental Services (EVX) that could well be included in a green portfolio.

Energy efficient transportation is another sector worth mentioning. It is possible to invest in the sector using PowerShares Progressive Transportation Portfolio (PTRP) ETF. Earlier I made the case for water ETFs as a way to take climate change and population growth into account when building a portfolio.

There are many more possibilities for a green investor to build a diversified portfolio using exchange traded funds. Follow this web site to learn more about the different ETFs available in the most important stock exchanges around the world!

3 comments for “Green ETFs for Green Investors

  1. December 21, 2009 at 8:19 pm

    cool post im driving a car powered on water fuel as energy source its good against global warming and it saves me loads of money too you check it out here: link

  2. April 21, 2010 at 4:02 pm

    Thanks for the information.
    There are other Advantages of Green ETF:-

    * Green ETFs have shown a growing trend in the number of investors and companies alike. Investors see a huge potential in endorsing green economics especially in developed countries. With increasing demand, the value of green ETFs will increase as well.
    * Green ETFs are good for short term traders due to their high volatility.

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