10 Best Clean Energy ETFs in Canada 2022: Go Green

The clean energy industry has rapidly become one of the hottest trends for investors worldwide. The renewable energy industry has seen a massive boost in interest in recent years due to rising concerns about climate change.

Renewable energy has long been slated to gradually phase out our reliance on traditional energy sources, but the activity in space has picked up pace in the last decade.

Investors interested in capitalizing on the growing demand for clean energy have the opportunity to invest in a potentially profitable space.

My guide to the best clean energy ETFs in Canada will help you identify some of the most promising investment vehicles you could consider delving into for this purpose.

Best Clean Energy ETFs In Canada

What Are Clean Energy ETFs?

ETFs, or Exchange-Traded Funds, are a type of investment vehicle that lets you diversify your investment capital across a basket of different asset classes that includes stocks and bonds. You can trade ETFs on a stock exchange during the day, similar to how you trade stocks on the stock market.,

When you invest in an individual stock, you are staking your investment on the performance of a single company on the stock market. Investing in an ETF means that you are staking the investment on the performance of a group of securities.

Investing in an ETF that tracks the performance of securities in a particular industry, like the clean energy industry, means that you are effectively gaining exposure to a portfolio of securities in that space.

This can be a better approach for risk-averse investors who prefer to rely on the expertise of investment managers to decide how to allocate their investment capital across various securities.

Creating a self-directed portfolio of funds that track the performance might give you better control over your asset allocation. However, it comes with the drawback of manually tracking the performance of all the equity securities in your portfolio and rebalancing it to align with your investment goals.

The Best Clean Energy ETFs In Canada

The Best Clean Energy ETFs In Canada

This section of my guide to the best clean energy ETFs in Canada will cover the top investment vehicles you could consider adding to your investment portfolio to dip your toes in the burgeoning industry.

There are only two Canada-listed clean energy funds available for you to consider if you are looking for homegrown Canadian clean energy ETFs that are pure plays on clean energy. The list also includes a couple of names that allocate a significant portion of their assets to clean energy assets.

However, there are funds listed in international stock markets that you could also consider. My guide will list some of the top ETFs you can consider in Canada and international markets.

1. Harvest Clean Energy ETF (HCLN)

Harvest Portfolio Group Logo

Some key facts about Harvest Clean Energy ETF (HCLN):

  • Ticker: TSX:HCLN
  • Inception Date: January 7, 2021
  • Assets Under Management: $71.1 million (as of November 30, 2021)
  • Management Expense Ratio: 0.68%

Harvest Clean Energy ETF (HCLN) is one of the newest funds launched on the TSX, and it is a pure play on the clean energy industry. HLCN ETF invests in a portfolio of the 40 largest Clean Energy Issuers that the fund manager chooses from the Clean Energy Investable Universe.

The underlying universe includes internationally diversified equity securities that generate returns solely from renewable energy.

HCLN ETF is a passively managed fund that tracks the performance of 40 equally-weighted clean energy companies. However, it does not track a specific market index like most passively-managed ETFs you can find.

HCLN ETF boasts an MER of 0.68%. The fund began trading on the TSX on January 07, 2021. It means that the performance metrics for the fund will be unavailable until January 7, 2022.

2. BMO Clean Energy Index ETF (ZCLN)

BMO logo

Some key facts about BMO Clean Energy Index ETF (ZCLN):

  • Ticker: TSX:ZCLN
  • Inception Date: January 20, 2021
  • Assets Under Management: $73.76 million (as of December 14, 2021)
  • Management Expense Ratio: 0.40%

BMO Clean Energy Index ETF (ZCLN) is a fund designed to provide you with investment returns by tracking the performance of the S&P Global Clean Energy Index.

The fund is another pure-play on the clean energy industry and its asset allocation is weighted based on how the securities are held within the underlying index. The index constitutes companies of small-, medium-, and large-market capitalization across emerging and developed markets.

ZCLN ETF is also a new fund, listed only on January 20, 2021. The performance metrics for the fund will be available by January 20, 2022. The passively managed fund comes with a lower cost compared to several other funds listed in this guide, boasting an MER of just 0.40%.

3. BMO Equal Weight Utilities Index ETF (ZUT)

BMO logo

Some key facts about BMO Equal Weight Utilities Index ETF (ZUT):

  • Ticker: TSX:ZUT
  • Inception Date: January 19, 2010
  • Assets Under Management: $477.14 million (as of December 14, 2021)
  • Management Expense Ratio: 0.61%

BMO Equal Weight Utilities Index ETF (ZUT) is another Canada-listed fund, but it is not a pure-play on the clean energy industry. The fund seeks to provide you with investment results by replicating the performance of the Solactive Equal Weight Canada Utilities Index.

ZUT ETF invests and holds securities with the same weighting as in the underlying index.

The Solactive Equal Weight Canada Utilities Index consists purely of securities listed as utility businesses in Canada. However, the fund allocates only about a third of its assets to the renewable energy industry through the utility businesses held by the fund.

If you are interested in investing purely in the renewable energy industry with zero exposure to returns derived from traditional fuel sources, ZUT ETF might not be suitable for you.

4. iShares S&P/TSX Capped Utilities Index ETF (XUT)

ishares logo

Some key facts about iShares S&P/TSX Capped Utilities Index ETF (XUT):

  • Ticker: TSX:XUT
  • Inception Date: April 12, 2011
  • Assets Under Management: $276.93 million (as of December 07, 2021)
  • Management Expense Ratio: 0.61%

iShares S&P/TSX Capped Utilities Index ETF (XUT) is another Canada-listed fund that you could consider a part of the list, but it is not a pure-play clean energy ETF. XUT ETF seeks to provide you with investment returns based on the performance of the S&P/TSX Capped Utilities Index.

ZUT ETF is a passively managed fund that allocates its assets to investing in and holding securities as they are held by the underlying index.

The S&P/TSX Capped Utilities Index comprises equity securities listed as utility businesses in Canada. XUT ETF does not offer international diversification, but it allocates a sizeable portion of its funds to the renewable energy industry.

At writing, the fund allocates 18% of its assets to renewable electricity. XUT ETF might not be a suitable investment for you if you want to derive investment returns purely based on the performance of renewable energy-related securities.

The Best Clean Energy ETFs In The US

5. iShares Global Clean Energy ETF (ICLN)

ishares logo

Some key facts about iShares Global Clean Energy ETF (ICLN):

  • Ticker: NASDAQ:ICLN
  • Inception Date: June 24, 2008
  • Assets Under Management: US$5.76 billion (as of December 14, 2021)
  • Management Expense Ratio: 0.42%

iShares Global Clean Energy ETF (ICLN) is one of the oldest clean energy funds. The US-listed fund seeks to provide you with investment returns based on the performance of the S&P Global Clean Energy Index.

It is, by far, the largest pure-play clean energy ETF worldwide, boasting assets under management worth over US$5.76 billion that are diversified across over 80 clean energy companies.

ICLN ETF boasts one of the lowest expense ratios among clean energy ETFs, boasting an MER of just 0.42%. The fund provides you with exposure to a portfolio of internationally diversified securities.

US-listed securities account for 43% of its asset allocation. Denmark comes in second, accounting for 11.82% of its asset allocation. China comes in at third, accounting for 6.64% of its asset allocation.

6. Invesco Solar ETF (TAN)

Invesco Dynamic Biotechnology & Genome

Some key facts about Invesco Solar ETF (TAN):

  • Ticker: NYSE Arca:TAN
  • Inception Date: April 15, 2008
  • Assets Under Management: US$3.57 billion (as of December 14, 2021)
  • Management Expense Ratio: 0.69%

Invesco Solar ETF (TAN) is another US-listed fund that is a pure-play on the clean energy industry. The fund seeks to provide you with investment returns based on the performance of a portfolio of publicly-listed securities that rely on solar energy for power generation.

Launched in 2008, it is an older ETF that tracks the MAC Global Solar Energy Index. There are not many solar businesses worldwide, so the fund effectively allocates its assets to roughly 50 companies.

TAN ETF is a passively-managed fund that boasts an MER of 0.69%, making it more expensive than many other funds listed in this guide. The fund will invest at least 90% of its total assets in securities that comprise the underlying index. You could use this fund to express an industry view of the global solar energy industry.

7. First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)

First Trust NASDAQ Clean Edge Green Energy Index Fund ETF

Some key facts about First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN):

  • Ticker: NASDAQ:QCLN
  • Inception Date: February 08, 2007
  • Assets Under Management: US$2.87 billion (as of December 14, 2021)
  • Management Expense Ratio: 0.60%

First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN) is one of the oldest green energy funds. The fund began trading in 2007 and it seeks to provide you with investment returns based on the performance of publicly-listed securities as they are held in the NASDAQ Clean Edge Green Energy Index.

The underlying fund is a modified market-cap-weighted index that gives larger companies a more significant index weighting.

QCLN ETF is a relatively costly fund that comes with a 0.60% MER. QCLN fund boasts the largest Tesla holding among all clean energy funds, capitalizing on investment returns from the performance of the electric vehicle industry atop the broader clean energy market.

8. Invesco WilderHill Clean Energy ETF (PBW)

Invesco Dynamic Biotechnology & Genome

Some key facts about Invesco WilderHill Clean Energy ETF (PBW):

  • Ticker: NYSE Arca:PBW
  • Inception Date: March 03, 2005
  • Assets Under Management: US$1.88 billion (as of December 14, 2021)
  • Management Expense Ratio: 0.61%

Invesco WilderHill Clean Energy ETF (PBW) is another US-listed clean energy ETF and it is the oldest on my guide to the best clean energy ETFs in Canada. The fund seeks to provide you with investment returns based on the performance of securities as they are held in the WilderHill Clean Energy Index.

The fund typically invests at least 90% of its assets in publicly-listed securities that comprise the underlying index.

The WilderHill Clean Energy Index consists of US-listed publicly-traded companies involved in the advancement of clean energy and conservation. The passively-managed fund boasts an MER of 0.61%, making it costlier than several of the funds listed in this guide.

9. Alps Clean Energy ETF (ACES)

ALPS Medical Breakthroughs

Some key facts about Alps Clean Energy ETF (ACES):

  • Ticker: NYSE Arca:ACES
  • Inception Date: June 27, 2018
  • Assets Under Management: US$881.87 million (as of December 14, 2021)
  • Management Expense Ratio: 0.55%

Alps Clean Energy ETF (ACES) is another pure-play on the clean energy industry. The fund seeks to provide you with investment returns based on the performance of publicly-listed companies that comprise the CIBC Atlas Clean Energy Index.

The fund allocates its assets to North American equity securities as held in the underlying index.

ACES ETF narrows its focus on the clean energy companies within the underlying fund, offering you with a more pure-play opportunity to invest in the renewable energy industry. The fund boasts an MER of 0.55%, making it a slightly costlier ETF than many others on this list.

10. Invesco MSCI Sustainable Future ETF (ERTH)

Invesco Dynamic Biotechnology & Genome

Some key facts about Invesco MSCI Sustainable Future ETF (ERTH):

  • Ticker: NYSE Arca:ERTH
  • Inception Date: October 24, 2006
  • Assets Under Management: US$431.45 million (as of December 14, 2021)
  • Management Expense Ratio: 0.55%

Invesco MSCI Sustainable Future ETF (ERTH), formerly known as the Invesco Cleantech ETF (PZD), is another pure-play on the clean energy industry.

The fund seeks to provide you with investment returns based on the performance of publicly-listed companies that comprise the MSCI Global Environment Select Index. The fund allocates 90% of its assets to securities held in the index.

The underlying index consists of securities that contribute to a more environmentally sustainable economy through more efficient use of global resources.

ERTH ETF diversifies its asset allocation across an internationally diversified basket of over 140 publicly-listed companies. The US-listed securities account for over a third of its asset allocation.

China-listed securities come in second, with a 22% asset allocation, and Japan comes in third, with 6.49% of its asset allocation. ERTH ETF boasts an MER of 0.55%.

What Is The Largest Clean Energy ETF?

What Is The Largest Clean Energy ETF?

It is surprising to see very limited investment vehicles listed on Canadian stock exchanges. If you are looking for the largest Canadian clean energy ETF, BMO Clean Energy Index ETF (ZCLN) takes the top spot, boasting assets worth $73.76 million at writing.

However, ZCLN ETF does not come close to meeting the more well-established iShares Global Clean Energy ETF (ICLN). ICLN is a US-listed fund that began trading in 2008, and it boasts a massive net asset value of US$5.76 billion, dwarfing all other funds listed in this guide.

How To Buy The Best Clean Energy ETFs In Canada

You can purchase the best clean energy ETFs in Canada through most Canadian brokerage platforms that offer stock and ETF trading. My top choices are Wealthsimple Trade and Questrade.

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To learn more, check out my full breakdown of the best trading platforms in Canada here.

Conclusion

Investing in the clean energy industry has to be one of the best moves for Canadian investors looking for exposure to an industry that can provide them with long-term investment returns.

It is no secret that the clean energy industry is well-positioned to boom in the coming years, and investing in the sector could prove to be profitable for you.

The hydrogen market is also another avenue you can explore if you are bullish on the green energy revolution. Check out my guide to the best hydrogen ETFs in Canada to view the options you can consider for this purpose.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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