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Matthew McCall

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Alternative Energy ETFs Set to Benefit from Oil Spill (PBW, NLR, KOL, TAN, FAN)

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As the oil continues to gush into the Gulf of Mexico the call for cleaner and safer energy sources heats up. The problem is that everyone forgot to tell the related stocks. The alternative energy ETFs have been pummeled during the market sell-off even as the need for cleaner energy becomes more apparent.

Does the action of the alternative energy ETFs over the last six weeks tell the long-term story or did they simply get caught up in the overall market selling?

The PowerShares Wilderhill Clean Energy ETF (NYSE: PBW) has fallen 18% since the oil rig sank into the Gulf on 4/22, much worse than the 12% fall of the S&P 500. The Market Vectors Nuclear Energy ETF (NYSE: NLR) has dropped 16% as many compare the oil spill to the Three Mile Island incident in the 1970’s. Coal, which is not the cleanest burning energy, but we have lots of it in the US is also taking a hit with the Market Vectors Coal ETF (NYSE: KOL) off 22%.

How about the “real” clean, alternative energy ETFs: solar and wind. The Claymore/MAC Global Solar Energy ETF (NYSE: TAN) has taken a beating, losing 25% since 4/22. The First Trust Global Wind Energy ETF (NYSE: FAN) tanked 23%.

It appears to me that the alternative energy ETF sector is not yet ready to make its move. Either investors need to take a long-term view and buy and hold or wait until the sector begins to gain some momentum before buying.

Posted in: Sector ETFs Specialty ETFs ETFs