What was once a highflyer in 2020, is now a slumping underperformer. The iShares Global Clean Energy ETF (ICLN) has fallen by more than 20% in 2021 after delivering roughly 140% in positive return in 2020 and outperforming the S&P 500 by almost 9 times during the same period.
The Thematic ESG ETF is one of the largest clean energy ETFs in the market with around $6.0 billion in assets under management. The fund invests in global equities in the clean energy sector and has 37% exposure to USA and 16% to Denmark. More than 50% of the funds are invested in electric utilities companies or renewable energy producers. The top holdings include Vestas Wind Systems (8.63%), Orsted (7.26%) and Enphase Energy Inc. (5.88%).
This year’s downturn can be attributed to two reasons. One, investors may have decided to take out their profits following the amazing 2020 run, causing this major correction. Two, the fossil fuels resurgence as economies reopen is simply irresistible for investors to pass on, especially with the 50% increase in Oil prices this year.
And it’s not just ICLN. Invesco Solar ETF (TAN), Invesco WilderHill Clean Energy ETF (PWYF), Invesco Global Clean Energy ETF (PBD) and other peers shared the same fate with double digits losses.
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