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The Russia-Ukraine war has been a major catalyst for the recent surge in clean energy stocks as investors bet on a push to scale-up clean energy investments by governments who are highly dependent on Russian oil & gas.
According to Castellum.AI, Russia has become the world's most sanctioned country on the planet (7,614 sanctions), snatching the first position from its close ally Iran (3,616) after being handed 4,860 sanctions since the invasion. Before the war, the commodity powerhouse was responsible for 17% of global natural gas production, 12% of oil production, and 40% of Europe’s natural gas imports. Sanctions have deeply affected the oil & gas sector with restricted supplies, lifting prices.
Solar energy industry is taking offThe MAC Global Solar Energy Index Total Return, which tracks companies in the solar energy industry reached a value of 357.7 (as of March 28th, 2022, 6:17 AM CDT), gaining +26% since the war broke out on February 24th, 2022.
Exchange-traded funds offer a great way to gain exposure to a basket of solar stocks that are set to benefit from increased investments in the space. Year-to-date, ETFs that focus on the solar theme received $57 million, a small amount compared to the $420 million during the same period of the prior year.
American Investors: Investing in Solar ETFsUS-based investors interested in Solar ETFs can explore the Invesco Solar ETF (TAN) and Global X Solar ETF (RAYS). TAN is the oldest and largest pure solar play ETF, with over $2.7 billion in assets under management.
TAN seeks to track the MAC Global Solar Energy Index and invests at least 90% of its total assets in the securities, American depositary receipts (ADRs), and global depositary receipts (GDRs) engaged in the solar industry.
As of March 25th, 2022, information technology has the highest sector allocation (60%), followed by utilities (23%), industrials (12.5%), financials (2.6%), and materials (2.4%). In terms of country allocation, the United States has the largest weight (46%), followed by China (24%), Spain (5.61%), Israel (4.16%), and Taiwan (4.11%).
The top 10 holdings account for 57% of the portfolio, with Enphase Energy Inc (11.14%), SolarEdge Technologies Inc. (10.26%), First Solar Inc (6.29%), Xinyi Solar Holdings Ltd (5.7%), and GCL-Poly Energy Holdings Ltd (5.41%), sitting as the top-weighted names.
TAN has a total expense ratio of 0.66% and trades primarily on the NYSE Arca. After losing -33% between October 31st, 2021, and January 31st, 2022, TAN's share price is on track to register its second straight monthly gain after a +9.15% bump in February.