Clean Energy ETFs Face off: GEX vs. PBW

Global energy demand is on the rise and nations, businesses and individuals are looking more than ever for new renewable, clean sources of energy. This new surge of interest in the clean, renewable energy space has many people looking to the sun, the wind, the ocean, ethanol & bio fuels, and other more obscure technologies. Investors are pouring money into new projects such as wind farms, solar farms, and other breakthrough technologies. Even T. Boone Pickens, a lifetime oil man, is getting behind the revolution.

Currently there are two ETFs that dominate the clean alternative energy sector, PowerShares WilderHill Clean Energy Portfolio (PBW) and Van Eck’s Market Vectors Global Alternative Energy ETF (GEX). These two funds appear to be quite similar, and in many aspects they are. However, a closer look reveals many of their differences in structure, size, and value.The first of these ETFs to hit the market was PowerShares’ PBW, which tracks the WilderHill Clean Energy Index. This index is comprised of 54 securities covering small (58%), mid (26%), and large cap (16%) companies. Roughly 2 years after the launch of PBW, Van Eck’s GEX hit the market, which tracks the Ardour Global Index. This index is comprised of 30 securities covering small (11%), mid (40%), and large cap (49%) companies. When looking at the top five holdings of the two funds as a percentage of the total fund, PBW’s top five make up 15%, whereas GEX’s top five make up a much larger 45% of the fund. Take a closer look at the individual holdings, and you will see just how different these two funds are. The older PBW has some very small companies, such as ReneSola (SOL) and EMCORE (EMKR) as its top solar holdings, compared to First Solar (FSLR), Q-Cells, and Suntech Power (STP) in GEX. Below is a comparison of the top 10 holdings of each fund.

On a value comparison, PBW’s average trailing P/E ratio is around 38, while GEX is sporting a 47 trailing P/E. Both of these ETFs are good investments for direct exposure to the wind and solar energy sector, however Van Eck’s GEX seems to be the more appropriately weighted of the two, despite its lack of diversification. If the underlying index that PBW tracks were to reshuffle to a more relevant weighting, it would deserve a second look.

For more ETF resources, visit http://www.etfplanet.com/

Second Quarter ETF Update: Winners & Losers

Another quarter has come and gone, the dust has settled, and now its time to see who made our top ten best and worst ETFs year to date. To avoid duplication, we’ve eliminated the lesser known ETFs that essentially track the same assets as the more popular issues, as well as funds with built in leverage.

As you can probably imagine, the top ten list was saturated with energy and commodity related names. The best overall performer was the United States Natural Gas Fund (UNG) which is now up over 75% for the year. Rounding out the bottom of the top performers was the iPath DJ AIG Copper ETN (JJC) which is up almost 29% for the year.

Best Performers Year to Date:
1) 75.1% - United States Natural Gas AMEX:UNG
2) 56.1% - PowerShares DB Energy AMEX:DBE
3) 51.0% - United States Oil AMEX:USO
4) 44.3% - PowerShares DB Commodity Index Tracking Fund AMEX:DBC
5) 42.1% - iShares S&P GSCI Commodity-Indexed Trust NYSE:GSG
6) 36.5% - SPDR S&P Oil & Gas Exploration & Prod AMEX:XOP
7) 34.1% - SPDR S&P Metals & Mining AMEX:XME
8) 31.5% - iShares Dow Jones US Oil & Gas Ex Index NYSE:IEO
9) 29.3% - ELEMENTS Rogers Intl Commodity ETN AMEX:RJI
10) 28.9% - iPath DJ AIG Copper TR Sub-Idx ETN NYSE:JJC

This year’s dogs are a different story, and surprisingly quite a diverse group. The worst performer, was the iPath MSCI India Index ETN (INP) which is sporting a solid -47% return year to date. Following close behind at -35% and -33% were the iShares DJ Broker-Dealers (IAI) and the KBW Capital Markets (KCE), respectively. Loaded with solar names, PowerShares WilderHill Clean Energy posted the 6th worst performance, followed by iShares DJ US Healthcare Provider, both losing roughly 30% this year. By far the most popular name on both lists, the Financial Select Sector SPDR (XLF) claimed the 8th spot on the worst list, losing a little over 29% of its value this year.


Worst Performers Year to Date
1) -47.4% - iPath MSCI India Index ETN NYSE:INP
2) -34.9% - iShares Dow Jones US Broker-Dealers NYSE:IAI
3) -32.8% - KBW Capital Markets ETF AMEX:KCE
4) -32.6% - Claymore/AlphaShares China Real Estate NYSE:TAO
5) -31.8% - PowerShares HighYield Dividend Achievers AMEX:PEY
6) -30.5% - PowerShares WilderHill Clean Energy AMEX:PBW
7) -29.7% - iShares Dow Jones US Healthcare Provider NYSE:IHF
8) -29.2% - Financial Select Sector SPDR AMEX:XLF
9) -29.1% - PowerShares Golden Dragon Halter USX China AMEX:PGJ
10) -28.5% - HealthShares Ophthalmology NYSE:HHZ

Our top ten best and worst lists were created using data pulled from Morningstar