PowerShares WilderHill Progressive Energy (PUW)
The lesser known PUW has actually been the best performer of the WilderHill indexes. The ETF, which gained 61% in 2009, consists of transitional technologies that improve the use of the dominant conventional sources we use today (coal, oil, natural gas). The companies in the index help de-carbonize polluting energy sources by cleaning them up, reducing emissions and making them more efficient.
Although renewable energy stocks have the most sex appeal, PUW gives investors exposure to more nitty gritty companies that are making materials lighter, recycling batteries, building the smart grid, efficient lighting - in other words, everything except renewable energy.
www.whprogressive.com
PowerShares Global Progressive Transportation Portfolio (PTRP)
September 2008 was a tough time to launch a new ETF, just preceding the market crash! But in a year when the US made its first serious commitment to upgrading the nation's rail system, PTRP rose 52%.
The index invests in innovative, energy efficient transportation - businesses that stand to benefit substantially from a societal transition towards cleaner, improved means of moving goods and people. It emphasizes solutions that make both ecological and economic sense and includes stocks around the world.
You'll find a combination of modern high-speed rail technologies and old-line railroads and many of the exciting newcomers in alternative vehicle technologies, from bicycles to advanced batteries and electric car-makers.
http://greentransportation.com/
Solar ETFs
Claymore/MAC Global Solar Energy (TAN)
Market Vectors Solar Energy ETF (KWT)
Tan rose 27.7% in 2009, reflecting the difficult year for solar (the S&P rose 28%), but 2010 could be a great year for solar. Of the two solar ETFs, we like TAN better than KWT, which gained 18.6%.
Although both ETFs have similar top 10 holdings and cost the same 0.65%, TAN has a wider diversity of stocks, which helped its performance this year. TAN is a much larger fund with $207 million in assets compared to KWT's $34 million. Neither fund compares in size to PowerShares Clean Energy PBW, which has $770 million in assets.
After lagging in 2009, solar stocks have already started moving up the first week of January, pushing the solar ETFs up 10% in the first week. Buy on dips!
Wind ETFs
First Trust ISE Global Wind Energy (FAN)
PowerShares Global Wind Energy ETF (PWND)
As with the solar ETFs, there are two wind ETFs, which also have subtle differences in holdings, accounting for the discrepancy in returns. PWND gained 31% in 2009 ($43 million in assets), while FAN rose 24% ($97 million in assets).
Their top 10 holdings are near identical making it difficult for many investors to distinguish between them. PWND outperformed in 2009 because of its higher weighting in China, benefiting from the country's stimulus package, which invested heavily in infrastructure upgrades. China High Speed Transmission Equipment Group rose 95% and was 4.73% of PWND's assets, while only 0.99% of FAN's, for example. Clipper Wind is in FAN's top holdings, which had a tough year.
Conclusion
If you're very familiar with the individual companies in the field, look carefully at the ETFs' holdings to choose between them. Look at the mix of large and small companies in the fund - does the fund emphasize large or small caps? Smaller companies are more volatile, but have the potential for higher returns. Pick funds that match your comfort level.
