There are few secular trends that are as impactful to the global economy right now as clean energy.
This interest has been part of a broader push from governments and companies around the world to reach global carbon neutrality over the next few decades.
As investors, it’s always worth looking into these global trends and trying to get in at an early stage.
But with so many clean energy companies on the market, how do you pick which one to invest in?
Enter clean energy ETFs, a balanced approach to tackling a rapidly growing sector.
This sector ETFs can provide a basket of stocks that track a certain type of clean energy or give you a diversified portfolio of several different energy sources.
Here are some of the best clean energy ETFs that contain the top renewable energy companies for Canadian investors in 2022.
Table of Contents
Best Clean Energy ETFs in Canada
1.Harvest Clean Energy ETF (HCLN)
This clean energy ETF is listed on the Toronto Stock Exchange and provides investors with a healthy mix of international clean energy companies.
It is an equally weighted ETF with 40 different holdings from across North America, Europe, Asia, and New Zealand.
| HCLN Holdings | Allocation |
| China Longyuan Power Group Corporation Limited | 3.8% |
| China Everbright Environment Group Limited | 3.3% |
| First Solar, Inc | 2.9% |
| VERBIO Vereinigte BioEnergie AG | 2.8% |
| Daqo New Energy Corp. | 2.7% |
| Infratil Limited | 2.7% |
| ITM Power PLC | 2.7% |
| SolarEdge Technologies, Inc. | 2.7% |
| Vestas Wind Systems AS | 2.7% |
| Xinyi Solar Holdings Limited | 2.6% |
The fund is balanced on a semi-annual basis and is passively managed.
The management fee is 0.40% and the MER sits at 0.68%, which are both reasonable but on the higher end of the ETF fees scale.
Key Facts as of November 2021 for HCLN are:
- MER: 0.68%
- Number of stocks: 40
- Dividend yield: N/A
- Distribution frequency: annually
- AUM: $59.2 million
- 1-year performance: 20.57%
2. iShares S&P/TSX Capped Utilities Index ETF (XUT)
Not every clean energy ETF has an explicit focus on pure clean energy companies. In this case, Blackrock’s popular iShares line of ETFs have chosen to go with Capped Utilities Index.
A deeper dive into the fund shows that XUT holds ten of the largest Canadian utilities companies.
| XUT Holdings | Allocation |
| Fortis Inc | 20.69% |
| Brookfield Infrastructure Partners | 16.06% |
| Emera Inc | 11.29% |
| Algonquin Power Utilities Corp | 8.84% |
| Hydro One Ltd | 7.26% |
| Brookfield Renewable Partners | 6.37% |
| Northland Power Inc | 6.04% |
| Altagas Ltd | 5.3% |
| Capital Power Corp | 3.31% |
| Canadian Utilities Ltd Class A | 3.16% |
So what’s so great about utilities? These companies often have a significant industry moat and are stable performers that replace growth with a solid dividend.
This fund sends out distributions on a monthly basis with a management fee of 0.55% and an MER of 0.61%.
XUT has returned steady gains on an annual basis and a cumulative return of 134%, not including dividend reinvestment, since its inception in 2011.
Key Facts as of January 2022 for XUT are:
- MER: 0.62%
- Number of stocks: 18
- Dividend yield: 3.4%
- Distribution frequency: Monthly
- AUM: $258 million
- 1-year performance: 5.75%
3. BMO Equal Weight Utilities Index ETF (ZUT)
For Canadian investors, BMO has its own utility index ETF that offers exposure to 16 of the largest Canadian utilities companies.
Similar to XUT from iShares, this fund is equally weighted and holds companies like Fortis, Brookfield, and Altagas.
Distributions are paid on a monthly basis and have regularly been increased on an annual basis.
| ZUT Holdings | Allocation |
| Transalta Corp | 7.53% |
| Canadian Utilities Ltd-A | 7.29% |
| Atco Ltd -Class I | 7.25% |
| Hydro One Ltd | 7.25% |
| Fortis Inc | 7.22% |
| Emera Inc | 7.17% |
| Brookfield Infrastructure Pa | 7.09% |
| Altagas Ltd | 7.04% |
| Algonquin Power & Utilities | 6.43% |
| Capital Power Corp | 6.18% |
The ZUT fund has a long history of steady returns since its inception back in 2010. It has a maximum annual management fee of 0.55% and an MER of 0.61%.
ZUT trades on the Toronto Stock Exchange and is valued in Canadian dollars.
Key Facts as of January 2022 for ZUT are:
- MER: 0.61%
- Number of stocks: 16
- Dividend yield: 3.38%
- Distribution frequency: Monthly
- AUM: $476.15 million
- 1-year performance: -0.71%
4. iShares Global Clean Energy ETF (ICLN)
If you are looking for an iShares ETF that is purely a clean energy investment, the ICLN fund is more of the conventional clean energy ETF.
ICLN holds 76 of the top clean energy companies in the world including some recurring favorites like Vestas Wind Systems, which is the largest weighted holding at 8.78%, and Enphase Energy which composes 8.12% of the fund.
An interesting difference with ICLN is that iShares has included heavy weighting for semiconductor stocks, something that most other clean energy funds do not have.
| ICLN Holdings | Allocation |
| Enphase Energy Inc | 8.38% |
| Consolidated Edison Inc | 6.76% |
| Vesta Wind Systems | 6.65% |
| Orsted | 5.69% |
| Solaredge Technologies Inc | 4.99% |
| Plug Power Inc | 4.96% |
| Iberdrola Sa | 4.59% |
| Edp Energias De Portugal Sa | 4.11% |
| Sse Plc | 3.98% |
| First Solar Inc | 2.93% |
Distributions are paid out on a semi-annual basis in January and June, so if you are seeking a more consistent cash flow, you might want to check out a fund that pays distributions on a quarterly schedule.
Key Facts for ICLN are:
- MER: 0.42%
- Number of stocks: 76
- Dividend yield: 1.34%
- Distribution frequency: Semi-annual
- AUM: $4.9 billion
- 1-year performance: -23.8%
5. Invesco Solar ETF (TAN)
Invesco is another popular brand of ETFs, and the TAN is a fund that focuses on solar energy companies.
TAN holds 44 different solar companies from around the world with 46% allocation to US stocks, a 22% allocation to Chinese stocks, and the rest spread across other markets around the world.
This clean energy ETF has a management fee of 0.50% and a total expense ratio of 0.66%.
| TAN Holdings | Allocation |
| Solaredge Technologies | 9.82% |
| Enphase Energy | 9.20% |
| First Solar | 7.34% |
| Xinyi Solar | 6.54% |
| Sunrun | 6.03% |
| Daqo New Energy Adr | 3.61% |
| Sunnova Energy | 3.32% |
| Shoals Technologies ‘A’ | 3.26% |
| Atlantica Sustainable Infrastructure | 2.97% |
| Hannon Armstrong Sustainable Infrastructure Capital | 2.77% |
Positioned as a solar ETF, TAN is perfect for people who believe solar energy is the most viable renewable energy source for the future.
Note it does not include popular companies like Tesla, which does operate in the solar industry through their Powerwall product offering, although it is obviously not its primary focus.
This fund trades on the New York Stock Exchange and is valued in US dollars.
Key Facts as of December 2021 for TAN are:
- MER: 0.66%
- Number of stocks: 44
- Dividend yield: 0.55%
- Distribution frequency: Annual
- AUM: $2.27 billion
- 1-year performance: -24.69%
6. First Trust Global Wind Energy ETF (FAN)
When we talk about clean energy solutions, we often overlook wind energy as a viable resource.
More and more countries are establishing wind farms in coastal oceans to take advantage of nautical winds.
These turbines create massive amounts of free energy that are used to power industry and other civil infrastructure.
FAN is an ETF from First Trust that holds 48 of the world’s top wind companies including Vestas, Siemens Gamesa, and Boralex.
| FAN Holdings | Allocation |
| China Longyuan Power Group Corporation Ltd. | 8.23% |
| Orsted A/S | 6.91% |
| Northland Power, Inc | 6.65% |
| Vestas Wind Systems A/S | 6.51% |
| Siemens Gamesa Renewable Energy, SA | 5.69% |
| EDP Renovaveis SA | 4.03% |
| Boralex Inc. | 2.85% |
| NextEra Energy, Inc. | 2.39% |
| Innergex Renewable Energy, Inc. | 2.24% |
| RWE AG | 2.23% |
The fund pays distributions on a quarterly basis with a 1.05% yield.
First Trust implements an expense ratio of 0.60% and traders on the NYSEARCA index which means it is valued in US dollars.
Key Facts for FAN as of Dec 2021 are:
- MER: 0.60%
- Number of stocks: 48
- Dividend yield: 1.93%
- Distribution frequency: Quarterly
- AUM: $347.93 million
- 1-year performance: -19.16%
7. BMO Clean Energy ETF (ZCLN)
This clean energy ETF managed by the Bank of Montreal is meant to track the S&P Global Clean Energy Index.
The BMO Clean Energy ETF holds 76 different assets that come from both developed and emerging markets.
The highest weighted stock in the fund is Danish energy company Vestas Wind Systems with an 8.69% position.
| ZCLN Holdings | Allocation |
| Vestas Wind Systems A/S | 8.02% |
| Enphase Energy Inc | 6.85% |
| Consolidated Edison Inc | 6.83% |
| Orsted A/S | 5.9% |
| Solaredge Technologies Inc | 4.57% |
| Edp-Energias De Portugal Sa | 4.5% |
| Iberdrola Sa | 4.4% |
| Sse Plc | 4.3% |
| Plug Power Inc | 3.99% |
| First Solar Inc | 2.98% |
The BMO Clean Energy ETF provides exposure to all different clean energy markets and even includes some oil and gas refinery companies.
This ETF trades on the Toronto Stock Exchange and is valued in Canadian dollars, making it a great option for those looking to invest in global clean energy ETFs in Canada.
Key Facts as of January 2022 for ZCLN are:
- MER: 0.40%
- Number of stocks: 76
- Dividend yield: N/A
- Distribution frequency: Annual
- AUM: $66.25 million
- 1-year performance: -36.88%
8. First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)
First Trust has provided a creative way for investors to get exposure to the clean energy industry.
This global clean energy ETF includes popular companies like Tesla, NIO, and XPeng from the electric vehicle sector.
It also includes some semiconductor exposure as well which definitely creates an ETF with a heavy tech focus.
The fund holds 60 different stocks in it and 74% of the holdings from the US market.
| QCLN Holdings | Allocation |
| Tesla, Inc. | 8.79% |
| Albemarle Corporation 8.57% | 8.57% |
| ON Semiconductor Corporation | 8.43% |
| NIO Inc. (ADR) | 6.73% |
| Enphase Energy, Inc. | 6.03% |
| Wolfspeed, Inc. | 3.91% |
| SolarEdge Technologies | 3.90% |
| XPeng Inc. (ADR) | 3.43% |
| Brookfield Renewable Partners LP | 3.29% |
| First Solar Inc | 2.97% |
QCLN trades on the Toronto Stock Exchange, is valued in Canadian dollars and is fully eligible for all types of investment accounts.
As far as ETFs go QCLN is considered on the riskier side of things, especially with its exposure to EV stocks that are known to be volatile.
Key Facts as of January 2022 for QCLN are:
- MER: 0.79%
- Number of stocks: 60
- Dividend yield: 0.40%
- Distribution frequency: Quarterly
- AUM: $14.7 million
- 1-year performance: -25.75%
9. ALPS Clean Energy ETF (ACES)
ALPS has created its own clean energy ETF that focuses on North American companies. The fund is split between 74% American stocks and 26% Canadian stocks.
The fund also has an electric vehicle component to it, but mostly focuses on pure-play clean energy companies.
| ACES Holdings | Allocation |
| Brookfield Renewable Partner | 5.57% |
| Tesla Inc | 5.48% |
| Northland Power Inc | 5.44% |
| Nextera Energy Partners Lp | 5.25% |
| First Solar Inc | 4.67% |
| Hannon Armstrong Sustainable | 4.59% |
| Sunrun Inc | 4.52% |
| Plug Power Inc | 4.44% |
| Enphase Energy Inc | 4.44% |
| Chargepoint Holdings Inc | 4.39% |
ACES is a relatively new clean energy ETF with its inception date in 2018. It pays out its distributions on a quarterly basis and has a management fee of 0.55%.
While ACES offers multiple different types of clean energy companies, it has significant weight for both solar and wind companies which make up nearly 50% of the portfolio. ACES trades on the NYSEARCA index and is valued in US dollars.
Key Facts as of December 2021 for ACES are:
- MER: 0.55%
- Number of stocks: 44
- Dividend yield: 0.8%
- Distribution frequency: Quarterly
- AUM: $874.4 million
- 1-year performance: -19.31%
10. Invesco WilderHill Clean Energy ETF (PBW)
PBW is another Invesco–branded clean energy ETF that is based on the WilderHill Clean Energy Index, which is an independent index of global companies in the clean energy industry.
PBW invests about 90% of its funds into stocks that are a part of this index and is weighted overwhelmingly in favour of companies in the industrial sector.
PBW holds about 80 companies right now, including several EV makers like Tesla, Nio, and Rivian.
| PBW Holdings | Allocation |
| Sociedad Quimica y Minera de Chile SA ADR | 2.16% |
| Daqo New Energy Corp ADR 2.13 | 2.13% |
| JinkoSolar Holding Co Ltd ADR | 2.07% |
| Infrastructure and Energy Alternatives Inc | 1.87% |
| Woodward Inc | 1.86% |
| Sunlight Financial Holdings Inc | 1.80% |
| SolarEdge Technologies Inc | 1.77% |
| Renewable Energy Group Inc | 1.74% |
| ReneSola Ltd ADR | 1.71% |
| Piedmont Lithium Inc | 1.68% |
Invesco has a management fee of 0.50% and a total expense ratio of 0.61% which are standard for the comparable clean energy ETFs.
PBW trades on the NYSEARCA index and is valued in US dollars. One caveat is that even though PBW holds international companies, the WilderHill index only tracks those that trade publicly in the US.
This means that any international stocks are likely ADRs or American Depository Receipts.
Key Facts as of March 2022 for PBW are:
- MER: 0.50%
- Number of stocks: 80
- Dividend yield: 3.77%
- Distribution frequency: Quarterly
- AUM: $1.56 billion
- 1-year performance: -52.9
11. KraneShares Global Carbon Strategy ETF (KRBN)
The KraneShares Global Carbon Strategy ETF is a slightly different way to gain exposure to the clean energy sector.
Using a complex system of futures contracts, this ETF allows investors to invest in cap-and-trade carbon contracts.
By tracking the prices of credits in carbon markets like the European Union Allowances and the California Carbon Allowances, this ETF has returned an impressive 44% over the past year.
12. Global X Lithium & Battery Tech ETF (LIT)
For an ETF focused on a quickly growing industry, investors may want to look at the Global X Lithium & Battery Tech ETF.
This ETF gives exposure to the full lithium cycle, from companies involved in mining to refining to the production of batteries.
With a total net asset value of $4.78 billion, this globally diversified ETF invests in markets like China (42% of the fund), the United States (21% of the fund), and Japan (10% of funds)
13. VanEck Low Carbon Energy ETF (SMOG)
The VanEck Low Carbon Energy ETF (SMOG) was created to track the MVIS Global Low Carbon Energy Index.
Giving investors exposure to a wide range of top renewable energy companies, SMOG consists of over 70 holdings that are globally diversified.
The fund began trading in 2007 and has an impressive track record of steady gains.
How To Buy Clean Energy ETFs in Canada in 2022
Buying clean energy ETFs in Canada is as simple as buying an asset from your brokerage.
Like with buying any stock, investing in a clean energy ETF is as easy as searching for the ticker symbol and hitting the buy option at the market price.
Questrade
Questrade is the top discount broker in Canada. Like Wealthsimple, this trading platform also offers commission-free purchases on ETFs as well as fees as low as $4.95 when selling
When you open a Questrade account here, you get $50 in free trade credit after funding your account with at least $1,000.
Learn more in this Questrade review.
Wealthsimple Trade
Wealthsimple Trade is one great option for Canadians looking to invest in renewable energy ETFs.
The platform offers commission-free trading on thousands of Canada and US-listed stocks and ETFs.
Clients who open a new account here are eligible for a cash bonus after trading $150 worth of assets.
QTrade
QTrade is another popular Canadian trading platform.
Based out of Vancouver, this platform charges slightly higher commissions and fees that are more in line with what is seen at the big banks in Canada.
Learn more in this Qtrade review.
Are Renewable Energy ETFs a Good Investment?
The clean energy sector is one of the top secular trends for the future.
In the same way that oil companies were great investments in the past, we will begin to see a global shift towards using clean energy as our native source of power.
This means that holding a basket of different stocks allows you to benefit from gaining exposure to the broader sector, rather than trying to choose one or two companies that will outperform the industry.
Downsides of Clean Energy ETFs and Stocks
The downside of clean energy ETFs is that the industry itself is still highly speculative.
Which energy sources will reign supreme in the long run? There are many questions that remain to be seen, so putting all of your eggs in the clean energy basket can be a risky play right now.
Some of these ETFs hold speculative electric vehicle companies which are not yet profitable and could potentially be out of business a decade from now.
As far as broad sector ETFs go, clean energy funds are definitely riskier than say an index fund that tracks the S&P 500.
Conclusion
Clean energy is gaining momentum around the world and will no doubt be the primary catalyst for lowering emissions and saving the environment.
But right now this industry is still speculative and even investing in clean energy ETFs can be a risky proposition.
If you can stomach a bit of risk and have a long-term investing horizon, then buying shares of clean energy ETFs can be a great play for the future.
Over the short term, there might be some more volatility, but having conviction in long-term plays is the key to successful investing!
Clean Energy ETFs in Canada FAQs
What is the best clean energy ETF for Canadians?
This is a great question, and there are many more ETFs we didn’t even cover here that you might prefer. As you can see, it can be hard to determine which is the best clean energy ETF as there is often a lot of overlap between the holdings within these ETFs.
With these top renewable energy companies appearing over and over again on these lists, it often comes down to individual preference when deciding what to invest in.
Does Vanguard have a clean energy fund?
Vanguard is one of the most popular ETF providers in the market. It does not have a pure-play clean energy fund though. Recently Vanguard has shifted its vision for its VDE Energy ETF to include more clean energy companies, but it has yet to release a clean energy-specific ETF.
What are the top renewable energy stocks in Canada?
Canada has a wide range of renewable energy stocks, but the best investment over the long term will likely be Brookfield Renewable Partners (TSX:BEP.UN). Brookfield is a global asset management firm and owns renewable energy projects around the world.
What is the largest renewable energy company in Canada?
The largest renewable energy company in Canada is Enbridge (TSX:ENB.TO). Enbridge has a market capitalization of nearly $90 billion USD and is clearly the largest pure energy company on the market.
Are renewable energy ETFs more expensive?
Actually, no. Renewable energy ETFs generally aren’t any more expensive than other ETFs. Generally, you can look at the expense ratio of an ETF to see how much the company will charge investors for managing the fund. Clean energy ETFs are mostly in line with the industry standard, so relatively speaking, renewable energy ETFs aren’t more expensive.
Related:
- XIU ETF Review
- HBAL ETF Review
- Best Energy ETFs in Canada
- Best Monthly Dividend Stocks
- Best Fidelity All-In-One ETFs In Canada
