Most renewable energy stocks struggled in 2023. The iShares Global Clean Energy ETF (NASDAQ:ICLN), which holds some 135 different clean energy public companies, fell more than 20% in 2023. Similarly, the Global X Solar ETF (NASDAQ:RAYS), which holds about 53 different solar names, plummeted 38%.
Elevated interest rates and relatively lower oil prices fomented an overall disinterest in renewable energy stocks, many of which rely on debt capital to build out their facilities and products. However, with interest rates likely to come down in 2024, coupled with the number of government incentives flooding the sector, 2024 could turn out to be a much better year for clean renewable energy stocks.
Below are three renewable energy ETFs to put on your watchlist.
Simplify Volt RoboCar Disruption and Tech ETF (VCAR)
Simply Volt RoboCar Disruption and Tech ETF (NYSEARCA:VCAR) takes a concentrated approach. It focuses on the few companies that appear poised to dominate new technology industries, including the electric vehicles and autonomous driving industries as well as the artificial intelligence space. Tesla (NASDAQ:TSLA) and Nvidia (NASDAQ:NVDA), for example, are amongst the ETF’s largest holdings.
Moreover, this particular ETF attempts to enhance investor returns by employing the use of options. VCAR is trading up nearly 7% YTD, beating both the S&P500 and the Nasdaq. With an expense ratio of just above 1%, this ETF can be a great way by which investors diversify their holdings and reap decent rewards.
Global X Autonomous & Electric Vehicles ETF (DRIV)
Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV) invests in stocks of companies operating across development of electric vehicles and autonomous vehicles. The ETF has more than $638 million of assets under management. Unlike the VCAR ETF, DRIV does not take a concentrated investment strategy. The exchange-traded fund holds 84 names with Nvidia and Toyota (NYSE:TM) being the top two names, both of which have a weighting of less than 4%.
Currently, DRIV shares are down more than 3% in 2024, likely due to the way EV stocks have performed thus far. However, DRIV’s share price could pick up as interest rates decline in the latter half of 2024.
Global X Solar ETF (RAYS)
The Global X Solar ETF was mentioned in the beginning of this article, and the funds primary focus is on solar energy. Having both a proclivity for growth and value stocks, the ETF invests in stocks of companies operating in different segments of the solar space, including solar energy materials, solar energy systems and components, power production, technology, installation and maintenance.
The Global X Solar ETF does have concentrated investment approach. In particular, Enphase Energy (NASDAQ:ENPH) and First Solar (NASDAQ:FSLR) are its two largest holdings with 11.9% and 8.3% fund weighting, respectively. Both of these companies focus on manufacturing solar panels and are, as a result, sensitive to real interest rates. As the Fed moves to lower rates later on this year, the Global X Solar ETF could experience a significant rally and benefit holders.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
