ETF Wrap: These clean-energy ETFs are surging after ‘handily’ beating the S&P 500 over the past three months

by | Jul 28, 2022 | Stock Market

Hi! I’m back with this week’s ETF Wrap digging into the recent bounce of clean-energy ETFs, including Thursday’s surge. Thank you to MarketWatch’s Isabel Wang for covering for me while I was away last week. Please send feedback and tips to [email protected] You can also follow me on Twitter at @cidzelis and find me on LinkedIn.

Clean-energy ETFs are outshining the S&P 500 index recently, getting another boost Thursday after an unexpected agreement in Washington on a bill that includes climate-related spending. The iShares Global Clean Energy ETF
Invesco Solar ETF
and First Trust NASDAQ Clean Edge Green Energy Index Fund
— the three largest U.S.-listed ETFs in clean energy — illustrate the recent outperformance, according to DataTrek Research co-founder Jessica Rabe.  “All three clean-energy ETFs have handily outperformed the S&P over the last 3 months,” Rabe wrote in an emailed note dated July 26. “Most of the top 3 names in these large clean energy ETFs have seen upside earnings revisions for this year and next over the last 90 days.” The rising confidence of analysts about the earning potential of renewable energy companies in 2022 and next year helps explain the ETFs’ outperformance compared to the broader U.S. stock market, according to the note. Expectations for accelerating earnings growth are generally important for growth stocks, particularly in “a tough market,” she said. The S&P 500 index
has tumbled 15.6% so far in 2022, with the stock benchmark much harder hit than the iShares Global Clean Energy ETF, which was down 3.8% this year through Wednesday. The fund has gained 6.9% over the past three months, while the S&P 500 dropped 3.8% over the same period spanning from April 27 to July 27, FactSet data show.  The Invesco Solar ETF has fared even better, eking out a gain of 0.2% this year through Wednesday, after soaring slightly more than 20% over the past three months.  “The market place has taken a look at a space that’s been pretty battered broadly across the board,” said Rene Reyna, head of thematic and specialty product strategy at Invesco, in a phone interview. “We’ve started to see a little bit of a bounce back and recovery,” he said of clean energy.   While the First Trust Nasdaq Clean Edge Green Energy Index Fund has sunk 15.9% this year through Wednesday, its gain of 9% over the past three months has …

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