GERMANY DRIVES NEW ENERGY INVESTING

Did Germany Just Bring Sexy Back To Green ETFs?
Dennis Hudachek, June 1, 2011 (Nasdaq)

"…[Germany] will turn to more renewables such as wind, solar and hydropower for future energy needs…[and Switzerland is] planning on phasing out nuclear power by 2032…[M]any are wondering: Will this jump-start the renewables industry and, by extension, the ETFs targeting the space?

"It's too soon to jump to any conclusions…[S]everal countries, including the United States, China and France…[will pursue] nuclear programs…Renewable energy is also heavily dependent on high oil prices and government subsidies, the latter of which could face trouble as European governments impose various austerity measures…"

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"Still, this is a significant development. Germany is an economic powerhouse in Europe, and currently gets almost a quarter of its energy supply from nuclear power…[so though it is] also a pioneer in renewable energy…[and] gets almost 17 percent of its energy from renewable sources…[it] would need to more than double its renewable energy output to make up for the shuttering of its electronuclear industry…[I]t needs to add 2 percent of its power capacity in renewables per year, on average, over the next decade.

"…[S]everal ETFs designed to benefit from a global shift to renewables…[1] The PowerShares Global Clean Energy ETF (NYSE Arca:PBD)…has the most comprehensive global reach in the renewable energy segment, holding companies involved in clean energy from 10 different countries…[and] $197 million in assets under management…[It is for] investors looking for a broad, diversified global exposure…"

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"…[2] The Market Vectors Alternative Energy ETF (NYSE Arca:GEX) …is heavily weighted in solar, and replicates the Ardour Global Index…[It] lost much of its star power in the wake of the financial crisis…[but] still has $148 million in assets…Top holdings include First Solar (8.95 percent) and Vestas Wind Systems (8.21 percent)…[It is] for investors looking for heavier concentration in several large companies…[3] iShares S&P Global Clean Energy ETF (NYSE Arca:ICLN)…is the cheapest…[It] aims to track the S&P Global Clean Energy Index…[and has] $73 million in assets…[It] is the newest…[and] provides a diversified exposure to clean energy companies from 10 different countries…

"There are a few additional factors to consider…Germany's current renewable mix is tilted [40+ percent] toward wind…Of the ETFs named here, GEX and ICLN have significant exposure to wind-almost 20 percent-and may benefit if Germany becomes a major driver…ICLN has the largest tilt toward Europe and German firms-39 percent and 7.5 percent…[A]fter Germany's announcement…the three funds all posted big gains…So did Germany really just bring sexy back to the renewable energy industry? Maybe…"