Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the alternative energy industry to thrive as we continue to try and reduce our dependence on fossil fuels, the Market Vectors Global Alternative Energy ETF
ETFs often sport lower expense ratios than their mutual fund cousins. The Market Vectors ETF's expense ratio -- its annual fee -- is 0.62%. The fund is very small, too, so if you're thinking of buying, beware of potentially large spreads between its bid and ask prices. Consider using a limit order if you want to buy in. It recently yielded about 3.6% in dividends, too.
This ETF has performed... well, poorly, losing badly to the world market over the past three and five years -- and also so far this year. It's the future that counts the most, though, and some see many of the ETF's beaten-down components as now being attractively priced. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.
With a low turnover rate of 26%, this fund isn't frantically and frequently rejiggering its holdings, as many funds do.
What's in it?
Some alternative energy companies had strong performances over the past year. Clean Energy Fuels
But a lot of companies didn't do as well last year, though they could see their fortunes change in the coming years. First Solar
Fellow solar concern GT Advanced Technologies
MEMC Electronic Materials
The big picture
Demand for alternative energy isn't going away anytime soon. A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.
Solar energy has a long road ahead, but the fundamentals of the industry are improving and the companies that survive have a huge opportunity. To see just how big the opportunity is for First Solar, check out our detailed report on the company. It can only be found here.