In the past 2 months, two new ETF’s have become available providing you with a diversified pure play in the solar space. The Claymore Global Energy ETF (TAN) began trading on April 15th while the Market Vectors Solar Energy ETF (KWT) began just trading about a week later on April 23.
Before I get into taking a closer look at these two options, I will say that solars have had a tremendous run in the past few weeks and are now in pull back stage. I think there is room to run to the downside before they begin stabilizing so be careful with these right now.
- the more liquid of the two trading nearly 400K shares a day
- seeks to return investment results that correspond generally to the performance, before the Funds fees and expenses of the MAC Global Solar Energy Index
- top 10 holdings:
- the fund is weighted nearly 30% in China, 29% in Germany and 26% in US based companies (this is certainly a global ETF!)
- technicals: the ETF broke out of a short base at 27.69 on May 14th with heavy volume and provides an entry point at 29 or lower, which is where it trades now. However it’s best to get in as close to the breakout point as possible and we could see a pull back to this area soon.
- Disclosure: I own TAN
- quite illiquid with just 50K shares a day changing hands
- seeks to replicate as closely as possible the price and yield performance of the Ardour Solar Energy Index
- top 10 holdings (source):
- this fund is also very diversified globally with 36% exposure in Germany, 26% in China and 24% in the US.
- Disclosure: I have no position in KWT
Considering that KWT is more concentrated in fewer companies, you’re taking on added risk, not to mention it’s less liquid meaning you’ll pay out in the difference between the bid and the ask with greater volatility. For my money, TAN appears to be the better choice over the long haul.
For a much more in depth look at these two ETF’s, you might like to have a look at the analysis from IndexUniverse.com