A recent study by the Yale Program on Climate Change Communication found that six in ten Americans are concerned about or even alarmed by climate change. If you’re worried about our planet and want to do what you can to make a positive difference, buying clean energy mutual funds is a great place to start.
Investing in clean energy funds allows you to support renewable energy solutions such as solar and wind while growing your net worth. The renewable energy industry is expected to grow substantially in the coming years. So it’s a great time for investors to buy in. Global investment in renewable energy reached $860 billion in 2021 and is expected to grow to $1.68 trillion by 2029.
What Are Clean Energy Mutual Funds?
Clean energy mutual funds are professionally managed investment vehicles. They pool money from shareholders to invest in businesses in the clean energy industry, such as solar, wind, hydropower, and geothermal companies. Some funds like FSLEX also invest in companies involved in other areas of climate change mitigation, such as waste management and pollution control.
Investing in mutual funds allows you to diversify your renewable energy investments. Instead of picking individual stocks which could underperform, you’ll be investing in a broad range of clean energy companies with every mutual fund share you buy. This helps reduce your risk and lowers the chances that you’ll lose money.
If you want to grow your portfolio while making investment decisions that align with your mission to save the world, check out the clean energy mutual funds and ETFs below.
Fidelity Select Environment and Alternative Energy Portfolio
FSLEX seeks capital appreciation through high-growth investments, which is good news if you’re trying to increase your net worth. The fund invests at least 80% of its assets in companies focusing on waste management, pollution control, alternative and renewable energy, and other important efforts in the fight against climate change. FSLEX has returned an average of 11% over the past decade and has a below average expense ratio, which makes it a good option.
Invesco WilderHill Clean Energy ETF
Invesco WilderHill Clean Energy ETF earned a spot on Kiplinger’s list of its favorite ETFs, and for good reason. The fund invests in a wide variety of clean energy sources for diversification, including wind, solar, and biofuel. Its three-year annualized return is a healthy 30.4%. However, it’s worth noting that recent returns have been lackluster to say the least. Its one-year return is a 57.5% loss. But now could be a good time to get in and buy shares on the cheap.
iShares Global Clean Energy ETF
iShares Global Clean Energy ETF is one of the largest green energy funds with an asset base of nearly $6 billion. It has a low expense ratio of 0.46% and holds over 112 different stocks to spread out shareholders’ risk. In the last ten years, it earned a nearly 16% compound annual return, making it a good option for eco-conscious investors.
Do you invest in clean energy mutual funds and ETFs? Why or why not? Share your thoughts in the comments section below!
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Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.
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