Best Clean Energy ETF to Invest in Right Now – Beginners Guide 2021

Fact Checked by Gary McFarlane

Looking for a Clean Energy ETF? With a Clean Energy ETF, you can expose your portfolio to many companies involved in sustainable energy at once. This means you can put your money where your mouth is when it comes to environmental action, as well as spread the risk to your portfolio.

Below we look at how Clean Energy ETFs work, as well as review some top ETF brokers.

#1 Clean Energy ETF Broker – eToro

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How to Invest in a Clean Energy ETF – Step-by-Step Guide 2021

Follow this simple four-step strategy to invest in a Clean Energy ETF:

  • Step 1: Open an eToro account: Navigate to eToro.com. Press the ‘Join Now’ button. Supply a username, email, and password. Press the ‘Create Account’ button.
  • Step 2: Verify your Identity: Scan and upload Proof of Identity (driving license, passport or ID card). For quick verification, upload a scan of your passport. Scan and upload Proof of Address (utility bill or bank/credit card statement). Do not deposit funds until you are verified by the eToro team. You will be contacted via email.
  • Step 3: Fund your account: Press the blue ‘Deposit Funds’ button. eToro offers a strong selection of deposit options depending on your country of residence: bank transfer, credit/debit card and e-wallet. No deposit fee is charged, but a currency conversion fee will apply if you are uploading in any currency other than USD.
  • Step 4: Invest in a clean energy ETF: To access eToro’s selection of 250+ ETFs, press the ‘Trade Markets’ or ‘Discover’ button on the left toolbar of your eToro dashboard. Then press the ‘ETFs’ button on the top toolbar. Browse at your leisure. To buy into any ETF, first click on its logo. Then press the blue ‘Trade’ button that appears to access your purchase options.

Where to Invest in a Clean Energy ETF – Top ETF Brokers

Choosing your broker for an ETF will depend on which country you live in. Many brokers are limited geographically in the clients they can serve. Many US brokers, for example, can only work with US and Asia Pacific investors. Premium UK broker Hargreaves Lansdown can only accept UK clients. But the three brokers under review below – eToro, AvaTrade and Capital.com – are regulated globally and serve investors worldwide.

1. eToro – Best Overall ETF Broker

eToro serves 20 million traders across 120+ countries. This global broker offers a full suite of financial products such as stocks, crypto, indices, forex, commodities and ETFs. eToro has attracted a great reputation for its simple user interface and easy-to-understand fee structure. eToro also offers enticing options for investing in Clean Energy using its proprietary CopyPortfolio system, which allows you to invest in a basket of Clean Energy companies without using an ETF.

ETFs

eToro offers 250+ ETFs. Many types are available, with the majority being index ETFs. Index ETFs track the stock exchange index of a particular country (like the UK’s FTSE 100 or the US’s S&P 500), or a specific sector index.

Other types of ETFs covered by eToro include commodity ETFs, real estate ETFs, bond ETFs, inverse ETFs, and leveraged ETFs.

One of the bonuses of using eToro to buy your ETF are two powerful options:

  1. You can ‘go short’ on an ETF. This means you can set it up so that your portfolio gains when the price of the ETF falls, rather than goes up. Going short is a great way of making money in bear markets.
  2. You can leverage your investment. This means you can set it up so that you receive double the gains (or falls) when the ETF price changes.

To go short on an ETF or leverage your investment, eToro makes it available to you as a CFD (contract-for-difference). A CFD ETF spread fee applies of 0.09%. eToro also uses CFDs to offer European and UK investors ETFs that are based outside these jurisdictions.

Features

eToro is always developing new ways for investors to vary their holdings and manage risk.

CopyTrader, for example, is eToro’s proprietary system for copy trading. Completely free of charge, you can review the performance of other traders and then instruct CopyTrader to apply their trading activity using an allocation of your own funds. This happens in real-time. You can set aside as many funds as you want to be used. You can copy many traders at once. As you can see below, eToro helpfully provides key stats, such as the 12-month performance of a copied trader’s portfolio, as well as a risk rating:

With CopyPortfolios, eToro bundles together baskets of stocks that you can then invest in en masse (much like you do with an ETF). This service is completely free of charge.

CopyPortfolios are grouped around different business sectors and even around groups of top eToro traders. Usually with CopyPortfolios, a minimum investment of $1000 USD is required.

eToro offers a Renewable Energy CopyPortfolio. This is a basket of 29 hand-picked global stocks in solar energy, electrical infrastructure, clean transport, wood fibre, recycling and waste.

This Renewable Energy CopyPortfolio has over $5 million USD in assets under management. It has attracted over 9,000 eToro investors.

Regulation

eToro is regulated in Australia by the Australian Securities and Investments Commission (ASIC). The Financial Conduct Authority (FCA) regulates eToro in the UK. And in Cyprus, regulation is covered by the Cyprus Securities & Exchange Commission (CySEC).

All eToro investor funds are held independently of eToro capital.

eToro Fees

Fee Type Fee Amount
Commission Fee 0% (for European and UK clients)
Deposit Fee $0
Withdrawal Fee $5
Inactivity Fee $10 monthly fee applies after 1 year of inactivity 
ETF $0 – except for CFD ETFs, where a 0.09% spread fee will apply

 

Pros

  • 120+ countries served with 20 million investors.
  • Regulated by ASIC, FCA and CySEC.
  • 250+ ETFs.
  • Powerful CFD options available with ETFs.
  • CopyTrader – for copying successful traders.
  • Renewable Energy CopyPortfolio.
  • Fee structure very clear.
  • Straightforward and intuitive user interface.

Cons

  • No support for MT4 or MT5 platforms.
  • A CFD ETF spread fee applies of 0.09%.
  • ETFs not searchable by type.

67% of retail investor accounts lose money when trading CFDs with this provider.

 

2. AvaTrade — Best MT4 & MT5 CFD Broker to trade ETFs

Regulated in 7 global jurisdictions, AvaTrade offers investors from around the world a good selection of 60+ ETFs. Trading in stocks, bonds, forex, and commodities are covered too.

AvaTrade has a great reputation for its coverage of trading platforms. With AvaTrade, you can supplement your trading experience with MT4 and MT5 – as well as use copy trading stalwarts DupliTrade and ZuluTrade.

A good range of deposit methods are offered by AvaTrade. Credit card and wire transfer is available for most global users. E-wallet options are offered for investors outside the US.

As a dedicated CFD broker, AvaTrade offers leveraged trading and margin accounts only. This makes AvaTrade suitable for the more experienced investor.

ETFs

AvaTrade offers 60+ ETFs. All are offered as CFDs with standard leverage of 5:1. A 0.13% spread fee for all ETF positions.

Features

AvaSocial is AvaTrade’s mobile app with a focus on social and copy trading. AvaOptions is AvaTrade’s proprietary options trading platform (not for beginners!).

 

Regulation

AvaTrade boasts truly global regulation:

  • EU: Central Bank of Ireland.
  • Cyprus: Cyprus Securities and Exchange Commission.
  • Australia: Australian Securities and Investments Commission.
  • Japan: Financial Services Agency.
  • South Africa: Financial Sector Conduct Authority.
  • Middle East: Abu Dhabi Global Markets Financial Regulatory Services Authority.
  • Israel: Israel Securities Authority.
  • Internationally: British Virgin Islands Financial Services Commission.

AvaTrade fees

AvaTrade deploys a small spread fee to cover your ETF position. Overnight fees apply to ETF positions.

Fee Type Fee Amount
Commission Fee NA
Deposit Fee $0
Withdrawal Fee $0
Inactivity Fee $50 per quarter after 3 months inactivity
ETF Fee spread fee of 0.13%

 

Pros

  • Standard spread fee for ETF positions.
  • 60+ ETFs to choose from.
  • Regulated around the world.
  • Great choice of platforms including MT4, MT5, ZuluTrade and DupliTrade.
  • Searchable FAQs.

 

Cons 

  • High non-activity fees.
  • CFD trades and margin account only.

71% of retail investor accounts lose money when trading CFDs with this provider.

 

3. Capital.com — Established CFD Broker for ETFs

As a regulated CFD broker, Capital.com offers numerous ways to trade, with an emphasis on forex and spread betting. Capital.com offers its services to 183 countries. Its user-base increased by 7 times over the course of 2020, and now Capital.com boasts 800,000 traders with 80,000 active members every month.

Capital.com accepts deposits via bank transfer for all countries covered, and bank cards and e-wallets for many countries.

Capital.com accounts are run on a margin basis. This is suitable for experienced investors only.

ETFs

Capital.com offers roughly 100 ETFs, which are presented in list format:

ETFs are offered as CFDs (as with AvaTrade). As with AvaTrade, you can go short on ETFs. Unlike AvaTrade, spread fees with Capital.com vary from ETF to ETF:

6 Clean Energy ETFs are offered by Capital.com:

    1. First Trust Global Wind Energy ETF.
    2. First Trust NASDAQ Clean Edge Green Energy Index Fund.
    3. Invesco Global Clean Energy ETF.
    4. Invesco Solar ETF.
    5. Invesco WilderHill Clean Energy ETF.
    6. SPDR MSCI ACWI Low Carbon Target ETF.

Features

Capital.com offers access to 4,000 markets as well as a great learning platform called Investmate.

Regulation

Officed in Belarus, Gibraltar, Cyprus and the UK, Capital.com is regulated by the  Financial Conduct Authority (FCA) in the UK, the Australian Securities and Investments Commission (ASIC) in Australia, the Cyprus Security and Exchange Commission (CySEC) in Cyprus and the National Bank of the Republic of Belarus (NBRB) in Belarus.

Capital.com fees

Fee Type Fee Amount
Commission Fee 0%
Deposit Fee $0
Withdrawal Fee $0
Inactivity Fee $0
ETF fee spread fee: differs according to ETF

 

Pros

  • Regulated in Australia, Belarus, the UK and Cyprus.
  • 800,000 members.
  • Access to 4,000 markets.
  • 100+ ETFs including 6 Clean Energy ETFs.
  • Phone-based customer support (UK number).
  • Strong selection of ways to deposit funds.

 

Cons

  • CFD trades only.
  • User interface can be a little overwhelming.

76.7% of retail investor accounts lose money when trading CFDs with this provider.

 

Invest in Clean Energy ETFs – Broker Price Comparison

Broker ETF Fee Deposit Fee Withdrawal Fee Inactivity Fee
eToro CFD ETFs attract a spread fee of 0.09% $0 $0 $10 monthly (after a year of inactivity)
AvaTrade All ETF positions come with a spread fee of 0.13% $0 $0 $50 per quarter (after 3 months inactivity)
Capital.com  All ETF positions come with a spread fee that varies from ETF to ETF $0 $0 NA

Note that all ETFs come with a fee charged by the provider. This ‘Expense Ratio’ fee is independent of any broker fees. The good news is that this is already priced into any ETF transaction.

It makes sense, though, to invest in ETFs which are run as cheaply as possible and this is reflected in their Expense Ratio. Look out for ETFs with low Expense Ratios of under 0.5%.

What is a Clean Energy ETF?

An ETF (Exchange Traded Fund) is a type of fund that investors can buy into. A key advantage of an ETF is that you can move in and out of it easily, just as you would with a stock position. 98% of the 9000+ ETFs available are passively-managed. This means that there is no fund manager constantly adjusting the portfolio. Rather, an existing stock market index is followed, or a stock pick selection is made and left alone.

The Invesco WilderHill Clean Energy ETF, for example, follows the existing Wilderhill Clean Energy Index:

Investors with high risk appetites can trade off movements in indices directly using CFDs. You can do this with eToro, Capital.com and AvaTrade. But ETFs offer the low-risk option suitable for long-term investing.

Many ETFs follow existing stock market indices. But some simply feature baskets of hand-picked stocks that reflect a particular business sector. Clean Energy ETFs generally represent companies involved in renewable energy like solar, wind and geothermal power or off-shot businesses such as recycling and waste management. You can always check what stocks an ETF carries prior to purchase.

Is Investing in a Clean Energy ETF a Good Investment? 

Check out the one-year returns (as of September 2021) on the ten most successful Clean Energy ETFs:

Clean Energy ETF Symbol One-year return
VanEck Vectors Low Carbon Energy ETF SMOG 64%
Invesco Solar ETF TAN 63%
SPDR S&P Kensho Clean Power ETF CNRG 55%
Invesco WilderHill Clean Energy ETF PBW 52%
Invesco Global Clean Energy ETF PBD 49%
iShares Global Clean Energy ETF ICLN 44%
ALPS Clean Energy ETF ACES 43%
First Trust Global Wind Energy ETF FAN 31%
Invesco MSCI Sustainable Future ETF ERTH 19%

Two of the biggest Clean Energy ETFs are the Invesco Solar ETF (TAN) and the Invesco WilderHill Clean Energy ETF (PBW). Both are offered by Capital.com:

  • Invesco Solar ETF specialises in solar energy companies and has almost $3 billion USD in management. Key holdings include Enphase Energy (ENPH) (solar energy distributor), SolarEdge Technologies (SEDG) (solar energy products) and Xinyi Solar Holdings (XNYIF) (solar glass producer). The Expense Ratio of this ETF is 0.69%, which is high for ETFs in general – but relatively normal for Clean Energy ETFs.
  • Invesco Wilderhill ETF has almost $2 billion USD under management. This ETF covers stocks in clean energy and conservation, with its top three holdings being MYR Group (MYRG) (electrical construction), Albemarle (ALB) (chemicals) and Daqo New Energy Corporation (DQ) (solar energy product supplier). Expense ratio: 0.69%.

Clean Energy ETFs are part of the ESG movement in investing. ESG stands for Environmental/Social/Governance. ESG metrics are largely new to investing. ESG looks at companies from the point of view of their environmental impact, social impact and governance ethics. Investments which have been given high ESG scores allow investors to satisfy their conscience by investing in companies which are geared to tackle climate and social issues.

Investing in a Clean Energy ETF – What are the Risks?

One of the key risks with Clean Energy investing is to go in too heavy with just one type of renewable energy. There’s a lot of interest in solar and wind power, for example – but either could rapidly be superseded by each other. It is sensible to invest a) across different types of renewable energies and b) across companies in their respective supply chains. This is where using an ETF, rather than investing in single stocks, spreads risk so usefully.

How to Invest in an ETF with eToro

Here’s your four-step strategy to invest in a Clean Energy ETF with eToro:

Step 1: Open an account with eToro

  • Go to eToro.com. Complete the short form, supplying a username, email address and a password. Be sure to tick the two acknowledgement boxes, having read the relevant documents. If you are satisfied, continue by pressing the blue ‘Create Account’ button.

67% of retail investor accounts lose money when trading CFDs with this provider.

 

Step 2: Verify your account

You will need to supply proof of identity as well as proof of address. This is standard for all reputable brokers. (Any broker that does not want to know your details is potentially in breach of global KYC – Know Your Customer – regulation.)

Required are Proof of Identity (POI) and Proof of Address (POA). The quickest way to get verified with eToro is to supply a scan of your passport as proof of identity. You can also use an ID card or driver’s license.

For Proof of Address, you can supply any of the following:

  • Gas/water/electricity/internet/phone bill.
  • Tax bill/letter.
  • Credit card/bank statement.
  • Letter from your local municipality/council.

Do not be tempted to deposit funds into your account before you have been verified. You will be notified via email once your account is verified. Depending on the quality of the ID you have provided, this can take from hours to days.

Step 3: Fund your account

When you are ready to deposit some funds, look to the lower left of your eToro user interface and press the ‘Deposit Funds’ button.

What options are available to you will depend on your country of residence. Bank transfer and credit/debit card deposits are available in many countries. Other options include PayPal, Neteller, Skrill, Rapid Transfer, Klarna/Sofort Banking, POLi, Trustly and iDEAL.

You can deposit in 15 different currencies. No deposit fee applies, but there is a currency conversion fee for all deposit currencies apart from USD. By accessing the ‘Settings’ button on the left of your interface, you can instruct eToro to display your deposited funds in a variety of currencies. But all eToro prices are shown in USD, and transactions are carried out in USD.

Step 4: Invest in an ETF!

It just takes a couple of clicks to find eToro’s selection of 250+ ETFs. On the left toolbar of your eToro interface, press the ‘Trade Markets’ button. At the top of your screen, you will see a ribbon of product choices:

Select ‘ETFs’. You will then see a big list of ETFs. The image below shows just 7 of the ETFs available:

You can scroll through and click on the graphs shown to examine an ETF closer. You can access chat feeds, research and charting tools.

When you are ready to buy, press the ‘Trade’ button at the top right of your interface.

 

Conclusion

Clean Energy ETFs are expected to multiply over coming years – as are ESG (Environmental/Social/Governance) ETFs in general. The global Clean Energy sector is predicted to be worth almost $2 trillion USD by 2030.

Of the three brokers we have reviewed, the six Clean Energy ETFs offered by Capital.com are worth investigating, particularly if you are interested in two of the biggest Clean Energy ETFs: the Invesco Solar ETF (TAN) and the Invesco WilderHill Clean Energy ETF (PBW). Remember that with Capital.com and AvaTrade, CFD trading only is available: this offers opportunities for the seasoned investor interested in getting in and out quickly, but newbies should stick with eToro.

eToro offers the simplest way of buying ETFs, as well as the largest range (250 ETFs). eToro’s own Renewable Energy CopyPortfolio is also worth a look. eToro has 20 million users worldwide by getting so many aspects of the investor experience right.

Best Clean Energy ETF Broker – eToro

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FAQs

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About Jules Blundell PRO INVESTOR

Jules is an experienced finance writer. He leverages his First Class degree from Cambridge University and his time at banks such as Goldman Sachs, Credit Suisse First Boston and Deutsche Bank to crunch complex financial topics for easy, educational reading.