The Invesco Global Clean Energy ETF (PBD) was launched on 06/13/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Alternative Energy ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors–think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting–not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco. PBD has been able to amass assets over $417.13 million, making it one of the average sized ETFs in the Alternative Energy ETFs. This particular fund seeks to match the performance of the WilderHill New Energy Global Innovation Index before fees and expenses.
This Index is an index comprised primarily of companies whose technologies focus on the generation and use of cleaner energy, conservation and efficiency & the advancement of renewable energy in general, as determined by WilderHill New Energy Finance, LLC.The New Energy Global Index is mainly comprised of companies in wind, solar, biofuels, hydro, wave & tidal, geothermal.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund’s return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.75%, making it one of the most expensive products in the space.
The fund has a 12-month trailing dividend yield of 0.51%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Fuelcell Energy Inc (FCEL) accounts for about 1.67% of the fund’s total assets, followed by Lithium Americas Corp (LAC) and Renesola Ltd Adr (SOL).
PBD’s top 10 holdings account for about 13.93% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco Global Clean Energy ETF has lost about -12.95% so far, and is up roughly 94.18% over the last 12 months (as of 07/02/2021). PBD has traded between $16.97 and $40.71 in this past 52-week period.
PBD has a beta of 1.22 and standard deviation of 31.21% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 119 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Global Clean Energy ETF is a reasonable option for investors seeking to outperform the Alternative Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
IShares ESG Aware MSCI EM ETF (ESGE) tracks MSCI Emerging Markets ESG Focus Index and the iShares ESG Aware MSCI USA ETF (ESGU) tracks MSCI USA ESG Focus Index. IShares ESG Aware MSCI EM ETF has $7.94 billion in assets, iShares ESG Aware MSCI USA ETF has $18.46 billion. ESGE has an expense ratio of 0.25% and ESGU charges 0.15%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Alternative Energy ETFs.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit
Zacks ETF Center
.
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