Some sectors are more levered to political outcomes than others and while the renewable energy space is still in its formative stages, there's political leverage here, too.
Last week, the week in which the Democratic National Convention took place, the S&P Global Clean Energy Index gained about 1.2% and there's data suggesting the near-term performance of alternative energy equities is correlated to former Vice President Joe Biden's poll numbers.
Indeed, Biden has an ambitious plan for renewable energy in the U.S. The Democratic candidate believes the Green New Deal “powerfully captures two basic truths, which are at the core of his plan: (1) the United States urgently needs to embrace greater ambition on an epic scale to meet the scope of this challenge, and (2) our environment and our economy are completely and totally connected,” according to his campaign website.
With that in mind, here are some renewable energy ETFs to consider in advance of Election Day and, if Biden wins, beyond.
ALPS Clean Energy ETF (ACES)
Things could come up aces for the ALPS Clean Energy ETF ACES if Biden wins the White House, but that scenario would simply be the icing on the cake for this high-flying ETF. After all, ACES is up 52.55% this year and has more than doubled since its 2018 debut – time periods in which President Donald Trump, not necessarily the biggest supporter of green energy, occupied the Oval Office.
What makes ACES one of the more compelling industry ETFs to consider if Biden wins is its diverse approach and deep reach into the alternative energy ecosystem.
ACES doesn't just focus on wind and solar, though those are critical elements in the fund. Other exposures include smart grid, electric vehicle and energy storage, biomass/biofuel, fuel cell makers and geothermal producers. That's a touch-all-the-bases approach that could be useful for investors under a Biden Administration.
Invesco Solar ETF (TAN)
The second-largest renewable energy ETF by assets, the Invesco Solar ETF TAN is higher by more than 70% this year. Indeed, some of TAN's 2020 ebullience is attributable to Biden.
“More than $50 billion of green stimulus has been approved by governments thus far this year. But perhaps more impactful has been the recent Biden campaign clean energy plan,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, said in a July note.
Something about TAN that shouldn't be ignored: the fund's fortunes aren't always tied to the party of the White House occupant. The solar ETF slumped while President Barack Obama was in office and has been a stellar performer while Trump has been in the Oval Office.
VanEck Vectors Low Carbon Energy ETF (SMOG)
The VanEck Vectors Low Carbon Energy ETF SMOG offers another diverse approach to alternative energy investing with a compelling kicker: a more than 11% weight to Tesla TSLA, which is among the largest among all ETFs.
SMOG tracks the Ardour Global Index, which is “intended to track the overall performance of low carbon energy companies which are those companies primarily engaged in alternative energy which includes 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,” according to VanEck.
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