Renewable Energy and ETFs

Posted by Blain Reinkensmeyer on Tuesday June 19, 2007

Since today we are talking about Exchange-Traded Funds (ETFs), I figure this question I received from Mike from Clever Dude would be a good one to answer. Mike asks,

“I’ve been wanting to invest in renewable energy. I don’t buy individual stocks, but I saw an ETF “ECO” that I’m interested in. First, how do I proceed in investing in this ETF, and second, do I have better options (maybe switch those two questions around)? BTW, I use eTrade right now, and I’d buy through my Roth IRA. “

How to Buy an ETF

First before getting into renewable energy and ETFs I want to explain that buying an ETF is as easy as buying a stock. I wrote an article on how to place a stock trade online, and with an online stock broker like Etrade, the process is as easy as the article depicts.

A common misconception with ETFs is that they are complicated and confusing like mutual funds, but the reality is they are the direct opposite. Associate ETFs not with mutual funds, but with stocks. Their prices fluctuate throughout the day like any other stock, have issued shares, the whole nine yards. An ETF simply tracks an index, commodity, or group of stocks under one symbol.

Bottom line: Buying an ETF online is as easy as buying a stock online, type in the symbol, amount of shares, and place your order.

Renewable Energy ETFs

I looked up “ECO” through yahoo finance and the web but could not find anything on this ETF. What I can suggest though if you want a renewable energy ETF is to check out one of the following:

  • PowerShares WilderHill Clean Energy (PBW)
  • Progressive Energy Portfolio (PUW)
  • Cleantech Portfolio (PZD)
  • First Trust NASDAQ Clean Edge ETF (QCLN)

The biggest and most widely held and well known out of those listed above the PowerShares WilderHill Clean Energy (PBW). It has a market capitilization of about $750 million versus the others who are all less than $40 million. Buying into PBW will eliminate a lot of the added volatility of the others, and if renewable energy continues to grow it will be a solid long term investment.

Some other notes about the other three, QCLN just started trading in February 2007 and only has a market cap of about $20 million. PUW and PZD aren’t too much bigger, and have been trading longer. Down the road there may very well be several other renewable energy ETFs released, but only time will tell when they will come about.

(Have a stock question of your own? Send it to me at ” Blain . Reinkensmeyer at gmail . com ” and I’d be happy to answer it here on the blog or via email for you)

If you enjoyed this post, make sure to subscribe to the feed!

Related Posts:


Filed Under Investing |
Subscribe to the Blog | Recieve Blog Updates by Email!

----------------------------------------

Share Your Knowledge »

Comment by Clever Dude Subscribed to comments via email
2007-06-19 14:26:58
I got ECO out of either a newspaper article or Money magazine (can’t remember right now). Go to etrade.com and plug in ECO in the stock lookup on the top right and it pulls back “WILDERHILL CLEAN ENERGY INDEX”. Is that the same as PBW?
Reply to this comment
Comment by Blain
2007-06-19 14:28:41
hmm… that is weird, ya they must be referring to PBW, I would be willing to bet they are the same.
Reply to this comment
 
 
Comment by MillionDollarJourney.com
2007-06-19 18:21:17
What kind of MER does PBW have?
Reply to this comment
 
Comment by The Financial Blogger Subscribed to comments via email
2007-06-19 20:20:19
Do you know any EFT related to uranium only ? thx ! FB.
Reply to this comment
 
Comment by Clever Dude Subscribed to comments via email
2007-06-19 23:32:00
So, if I wanted to buy shares of PBW, how much do I need to buy? 100 shares? Can I buy 80 shares of this ETF instead? I have 1800 to spend in my Roth right now.
Reply to this comment
 
Comment by Blain
2007-06-20 12:00:10
“What kind of MER does PBW have?” I am assuming you mean Management Expense Ratio (this lingo throws me off time to time) of which to be honest I have no idea. cry “Do you know any EFT related to uranium only?” From what I know there is not. You can buy into ETFs that hold uranium companies, but from what I found they only will make up at most less than 5% of holdings. If I find anything though I’ll let ya know cool “So, if I wanted to buy shares of PBW, how much do I need to buy? 100 shares? Can I buy 80 shares of this ETF instead? I have 1800 to spend in my Roth right now.” Yup, you can buy 80, 50, 100, 1000 whatever you’d like. $1800 to spend would get you a little less than 90 shares at the last of $20.27
Reply to this comment
 
Pingback by Celebrate my first stock purchase with a...UH OH! at Clever Dude Personal Finance & Money
2007-06-21 11:32:18
[…] want to make this public, it’ll probably make for a chuckle. I got some help from Blain to understand Exchange Traded Funds (ETFs), and what’s available regarding renewable and alternative energy. One of the ETFs he […]
Reply to this comment
 
Pingback by ST101 Reader Makes First Trade Online
2007-06-21 11:54:09
[…] was checking my email just now and approved a pingback on my post regarding the basics behind Exchange Traded Funds (ETFs). Well, it seems that the person I answered the question for, a blogging colleague of mine known as […]
Reply to this comment
 
Pingback by ST101 Week in Review 7
2007-06-22 19:12:55
[…] Renewable Energy and ETFs […]
Reply to this comment
 
Name (required)
E-mail (required - never shown publicly)
URI
Subscribe to comments via email
mrgreen neutral arrow idea ? ! -) roll twisted evil cry oops razz mad lol cool ??? shock eek sad smile grin
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <code> <em> <i> <strike> <strong> in your comment.
(Please Note: if this is your first comment, it will have to be approved before appearing publicly.)