PBD ETF: Going beyond US-only clean energy

I think it’s clear that the clean energy movement is not going away. Some may disagree with the idea that we need it given an abundance of fossil fuels, but the push for alternative energy sources that are less harmful to the environment just won’t stop. And with that comes opportunity. If you like the clean energy space and want global exposure, then you might want to consider the Invesco Global Clean Energy ETF (NYSEARCA:PBD). We are at an inflection point where environmental needs meet new technological breakthroughs, and clean energy is not just a passing fad, it is changing industries across the globe. PBD offers investors a chance to be part of this big change by offering a mix of stocks from leading companies in clean energy solutions. As more and more countries make efforts to reduce carbon emissions and renewable technology continues better and better, this fund looks like a smart bet for anyone looking to invest in sectors that are set to grow in the future.

PBD aims to track the WilderHill New Energy Global Innovation Index. This index refers to companies around the world that bring new ideas to the field of clean energy. It serves as a benchmark for how clean energy is done, covering a wide range of companies involved in renewable energy, energy saving and efficiency. The aim of the fund is to provide investors with a diversified stake in the clean energy sector, including solar, wind, water and other renewable energy sources. When you put your money in this ETF, you’re betting that clean energy technology will continue to grow and develop around the world.

A look at holdings

No position represents more than 1.26% of the fund. This is quite diversified overall – something you rarely see with niche funds like this.

What do these companies do? Tianneng Power International Ltd. (OTCPK:TIANF) manufactures batteries for electric cars and stores renewable energy in China. Sunnova Energy International (NOVA) provides solar and home energy storage services in the US, focusing on solar energy solutions and energy control. XPeng Inc. ADR (XPEV) builds smart electric cars in China, with an emphasis on cutting-edge autonomous driving technology. NIO Inc. ADR (NIO) builds state-of-the-art smart electric cars in China, introducing new battery-swapping technology. And Eos Energy Enterprises (EOSE) manufactures zinc-based energy storage solutions for the U.S. utility, business and factory sectors

Definitely global… but is it too much China?

Sectoral and global allocation

The fund invests heavily in solar and wind power, showing how these technologies are becoming increasingly important in the global energy mix. More and more people are using solar energy because now it costs less and the technology has become better. Wind power, both onshore and offshore, continues to grow. This is due to helpful policies and more people wanting clean energy. From a sector perspective, the companies are well classified, so there is good diversification of the group here as well, with most of these stocks being characterized as Industrials, followed by Utilities and Tech.

The fund spreads its investments across North America, Europe and Asia, which gives it good geographic diversity. So no – it’s not mainly China by any means.

While the bulk of the fund is from US companies at 28%, the global coverage is well spread – a big plus in my view.

Peer comparison

When you compare PBD to other ETFs like the Invesco WilderHill Clean Energy ETF ( PBW ), you’ll notice some big differences. Both funds focus on clean energy, but PBD looks at the global picture, while PBW stays in the US. This matters a lot for investors who want to spread their money around the world. PBD also offers a broader network that covers solar, wind and hydro, making it stand out from funds with a narrower focus. This broad approach can help reduce risks if one sector is affected.

When we look at the price ratio of PBD to PBW, we find that PBD has substantially outperformed. Clearly, global diversification has worked.

Pros and cons

A big plus is that PBD gives you a stake in a rapidly growing field driven by worldwide shifts towards green practices and carbon reduction. The clean energy business is set to grow a lot, driven by new technologies and helpful government regulations. Also, PBD’s mix of investments in different clean energy areas and locations around the world offers a good balance of potential gains and risks.

But remember that clean energy stocks can be quite unpredictable. The market raises and lowers new laws, and technological breakthroughs can shake things up. While the fund allows you to invest around the world, you need to be aware of political risks and currency changes that could affect your returns. Investors need to think carefully about these risks and see if they match how much risk they are willing to take and what they want from their investments.

Conclusion

Overall, I like the Invesco Global Clean Energy ETF. Its mix of holdings, global reach and focus on innovative clean energy solutions make it a smart choice for any forward-looking portfolio. However, those considering investing should keep in mind how unpredictable this sector can be and how far-reaching market forces could affect returns. Solid portfolio.