These Clean Energy ETFs Look A Little Dirty (ICLN, PBW)

The prospect of getting more energy from so-called clean sources rather than from fossil fuels has provided much political fodder over the years. While the green movement has picked up steam, clean energy has proven to be a tricky investment thesis.

Take these two clean energy ETFs for example. The iShares S&P Global Clean Energy Index (NYSE: ICLN) and the PowerShares WilderHill Clean Energy ETF (NYSE: PBW) would seem like logical places for investors to turn to play the clean energy phenomenon, but the recent returns aren't as tidy as one might expect.

Year-to-date, PBW is up 20% while ICLN is flat. Zero in on the three month performance and both ETFs are flat and look poised to drop.

ICLN allocates 45% to solar, 33% to producers and transmitters of energy, 15% to wind power and also holds a few battery makers and a geothermal company. The geographic diversity is a point in ICLN's favor with the U.S. accounting for 24% of holdings. China gets 17%, Spain and Germany, 14%, and Norway and Chile each get 5%.

PBW is different in that it focuses largely on tech companies that supply parts and components to green energy companies. PBW's top holdings include Applied Materials (Nasdaq: AMAT) and Cree (Nasdaq: CREE).

In theory, longer term investors could own both ETFs and still find some green energy diversification, but in the near-term, ICLN and PBW look kind of weak and in need of a spike in crude oil prices to rejuvenate the green energy debate. As such, if oil prices remain in a tight range, ICLN and PBW may be good candidates for small short positions.