Wise New Financial Investments in Alternative Energy ETFs

August 1, 2008 · Filed Under ETFs, Finance, Green, Mutual Fund, Solar, Wind

With all the talk about moving our country to alternative forms of energy, it made me wonder if there were ways I could help move this process along a little faster. I am currently invested in a variety of mutual funds, but many of them only invest extremely small shares in companies that are pushing for alternative sources of energy. One big company I found in many of them was General Electric. This is just one company though.

By pure luck, I saw a news article talking of a new ETF by Financial Trust called Global Wind Energy Index Fund (FAN) by First Trust Financial. This fund has only been out for a month now, it is one of the first of its kind. The Wind Energy ETF invests in companies that are involved in the process of making wind turbines. This fund invest in some of the major players of the Wind Turbine market right now including Vestas Wind Systems, Hansen Transmissions and even GE.

Wind energy is not the only alternative energy sector that has an ETF associated with it. Solar Energy does as well with the Market Vectors Solar ETF (KWT) that is really similar to FAN, but invests in major companies involved with producing solar panels.

Before I proceed any further, I want to make sure all the financial terms are not confusing everybody, so I will go into what an ETF is. Wikipedia is not always the most reliable source, but their entry on ETFs really sums up what one is:

ETFs offer public investors an undivided interest in a pool of securities and other assets and thus are similar in many ways to traditional mutual funds, except that shares in an ETF can be bought and sold throughout the day like stocks on a securities exchange through a broker-dealer.

The basic idea is that an ETF is a mutual fund in which you can publicly trade like stocks, but don’t have many of the expense fees that mutual funds have.

What I really like about these new alternative energy ETFs is that I feel like I am making a difference. Since many of the companies in this sector are up-and-coming, investing in them can really help with the push to begin using alternative energy sources. With just a small amount of money, you can invest in many of the top companies of the alternate energy sector. This also reduces some of the risks involved with investing in smaller companies like these.

Just a word of caution. Be very careful and make sure you thoroughly research these and other investments before committing any money to them. They are very specific sectors and could lose money just as with any investment.

When I scrape a little extra money together, I will try investing in FAN and see how it turns out. I found a great article with further green mutual funds and ETFs. Good luck investing and hopefully you will be able to incorporate green stocks in your portfolio.

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