Contrarian Buying Opportunities in U.S. Clean Energy ETFs
While U.S. stocks have seen double-digit gains in 2024, clean energy stocks have lagged behind. Some clean energy ETFs have not only underperformed the $S&P 500(.SPX)$ but have also dropped in value.
Clean Energy Remains a Long-Term Trend
Despite this short-term weakness, clean energy remains a long-term trend. For long-term investors, it might be wise to overlook short-term fluctuations and seize the rare contrarian buying opportunities.
The clean energy market is rapidly expanding as global demand for renewable energy rises. Governments worldwide are focused on reducing carbon emissions and advancing renewable energy, creating significant growth potential for related companies.
Many countries have introduced incentives and policies to support clean energy, such as U.S. tax credits for renewable energy and green infrastructure investments. Additionally, technological advancements in solar, wind, and battery technologies are continuously driving efficiency improvements and cost reductions.
Current High Interest Rates in the US
One major factor behind the recent downturn in clean energy stocks is the current high interest rates in the U.S., which are at a 22-year peak. Clean energy companies often operate with high leverage, making them particularly sensitive to rising rates.
However, with the Fed's anticipated rate cuts, U.S. clean energy investments are likely to benefit from more favorable conditions.
On the policy front, as Vice President Harris's chances of winning increase, the U.S. stock market has started showing signs of a “Harris trade.” Long-depressed solar and clean energy stocks are beginning to recover.
Harris's trade policies are expected to boost America's global competitiveness in climate change and technology innovation, benefiting stocks in clean energy, artificial intelligence, and autonomous driving technologies.
Given this, here are some U.S. clean energy ETFs worth considering: $iShares Global Clean Energy ETF(ICLN)$ $First Trust NASDAQ Clean Edge Green Energy Index Fund(QCLN)$ $Invesco WilderHill Clean Energy ETF(PBW)$ $BlackRock World ex U.S. Carbon Transition Readiness ETF(LCTD)$ $ALPS Clean Energy ETF(ACES)$ $SPDR S&P Kensho Clean Power ETF(CNRG)$ $VanEck Low Carbon Energy ETF(SMOG)$
$TCW Transform Systems ETF(NETZ)$ $ALPS Clean Energy ETF(ACES)$ $Invesco Global Clean Energy ETF(PBD)$ $Global X Hydrogen ETF(HYDR)$ $Fidelity Clean Energy ETF(FRNW)$ $Defiance Next Gen H2 ETF(HDRO)$ $Goldman Sachs Bloomberg Clean Energy Equity ETF(GCLN)$ $Virtus Duff & Phelps Clean Energy ETF(VCLN)$ $SmartETFs Sustainable Energy II ETF(SOLR)$ $Blue Horizon BNE ETF(BNE)$
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