6 Clean Energy Funds to Consider

Clean energy investments in the United States have faced persistent headwinds over the past four years. High interest rates have weighed heavily on renewable energy companies, which typically rely on significant upfront capital and debt financing to fund their construction costs. Rising input costs—particularly for materials like steel and copper—have further strained margins.

More recently, the political environment has added pressure, with President Donald Trump opposing renewable energy initiatives. His proposed legislation includes an indefinite ban on new wind farm approvals and a rollback of tax credit eligibility under the Inflation Reduction Act. As a result, US investments in solar and wind projects have slowed this year, contrasting sharply with global trends. Global investments in renewable energy sources have reached a record high of nearly $400 billion in the first half of the year, according to BloombergNEF.

Why Clean Energy’s Long-Term Fundamentals Are Strong

Yet the long-term fundamentals for clean energy remain intact, which makes it promising for sustainable investors and conventional investors seeking to participate in the energy transition. Rising energy demand—driven in part by the rapid expansion of artificial intelligence-powered data centers—and the growing cost-competitiveness of renewables continue to support the sector’s outlook in the US. Morningstar equity analysts project that wind and solar will steadily rise to over 40% of generation over the next decade, more than double current levels.

This positive long-term outlook, coupled with the prospect of lower interest rates, has helped support a recovery in renewable energy returns this year, despite the political setbacks.

Meanwhile, nuclear energy, another source of clean (but nonrenewable) energy that was once sidelined, is experiencing a resurgence. Major US tech companies, including Microsoft MSFT, Google GOOGL, Amazon.com AMZN, and Meta META, have signed nuclear energy contracts or made strategic investments to secure stable, carbon-free power for their infrastructure. Nuclear remains politically supported in the US, with key tax provisions preserved for existing plants.

Six Clean Energy ETFs—and One Focused on the Grid

Against this backdrop, we present six exchange-traded funds that span the clean energy spectrum—from broad-based funds to niche plays in solar, wind, and nuclear. All may be of interest to sustainable investors and conventional investors alike.

In addition to these six ETFs, we highlight a grid infrastructure ETF for those investors seeking a slightly different, yet related exposure. Beyond clean energy, massive investments in grid infrastructure are unavoidable. The current energy system was not designed to support distributed solar, electric vehicles, or the exponential growth of data centers. As demand surges, upgrading the grid is no longer optional.

Three Broad-Based Clean Energy ETFs

The three broad-based clean energy ETFs discussed below invest in companies producing renewable energy and in “clean tech” companies providing the technology that supports the development of renewable energy, including energy storage and efficiency solutions. Clean energy ETFs differ in a number of important ways. Investors need to consider whether they want mainly US exposure or global exposure, how much small-cap exposure to take on, and concentration risk.

With $1.5 billion in assets, iShares Global Clean Energy ICLN is the largest clean energy ETF. It focuses on companies producing renewable energy or providing the technology for clean energy production and uses. The fund is global in scope, with just 30% of its assets in the United States and 70% outside the US spread among about 100 large-, mid-, and small-cap holdings. Its largest position, at a hefty 9.5% of assets, is US-based First Solar FSLR, which makes solar panels and develops utility-scale photovoltaic power plants. Second-largest holding Vestas Wind Systems VWS (6.4% of assets), a Danish firm, specializes in the design, manufacture, installation, and servicing of wind turbines for onshore and offshore wind power projects.

From a traditional sector perspective, the fund has 54% of assets in utilities that produce clean energy, 24% in technology, and 21% in industrials. A three-year standard deviation of returns of 26.7 shows the fund’s volatility, and iShares Global Clean Energy is the least volatile of the clean energy funds presented here. Its annualized trailing five-year return is negative 2.2%, but its year-to-date return (to August) is 27.5%, beating the Morningstar US Target Market Exposure Index by 16.9%. With an expense ratio of 0.39%, iShares Global Clean Energy is the cheapest option of those discussed here.

First Trust Nasdaq Clean Edge Green Energy ETF QCLN is the second-largest clean energy ETF. Although this $451 million fund is US-focused, with 93% in US holdings, it has a broader investment scope than the iShares fund does. In addition to renewable energy producers and enablers, the fund invests in energy efficiency and management, exemplified by third-largest holding ON Semiconductor ON (7.3% of assets), and in EVs, with Tesla TSLA (6.4%), which ranks fourth. First Solar (8.1% of assets) is its top holding, followed by Bloom Energy BE, which makes fuel cell systems that provide clean electricity and hydrogen for businesses and utilities.

First Trust Nasdaq Clean Edge Green Energy ETF is a compact 47-position portfolio biased toward small caps (63% of the portfolio). It has only a 9.3% position in utilities, reflecting less focus on clean power producers, 39% in technology, and 23% in industrials. With higher exposure to small caps, this fund is a bit more volatile than the iShares fund, with a three-year standard deviation of 36.4. Investors have not been rewarded for that volatility, with a negative 2.1% annualized trailing five-year return. Its expense ratio is 0.58%.

The distinguishing feature of the third-largest clean energy ETF, Invesco WilderHill Clean Energy PBW, is its focus on US small caps. Eighty percent of assets in this $353 million ETF are in small-cap stocks, and only 6% are in large caps. The portfolio is mostly US-based (80% of assets) and its emphasis is on clean energy, energy efficiency, and energy storage. Its largest holding, Sunrun RUN, a solar energy company, takes up 3.3% of assets. The second-largest holding is Bloom Energy. Solid Power SLDP, the third-largest holding, makes batteries, primarily for EVs and other mobile power applications. The fund has 33% of assets in industrials, 25% in technology, 16% in materials, and only 6% in utilities. Its three-year standard deviation is 39.6, a reflection of the volatility that comes with its small-cap and thematic focus. To wit: The fund gained 206% in 2020 and lost 30% in 2021. Its five-year trailing return is negative 13%, with an expense ratio of 0.64%.

The Continuing Case for Solar, Wind, and Renewable Energy Investments

Investors believing in the long-term drivers of solar and wind power can look at the following two ETFs.

Invesco Solar ETF

With $723 million in assets, Invesco Solar ETF TAN invests in companies involved in global solar energy businesses. It is a compact small-cap portfolio of 29 names, with half of the assets in non-US companies. At 9.3% of assets, its largest holding is First Solar. The second-largest holding, US-based Nextracker NXT (9.2% of assets), makes intelligent solar tracker systems for utility-scale and distributed generation photovoltaic projects. Number-three holding is Chinese GCL Technology Holdings 03800 (8.3% of assets), which specializes in producing polysilicon and silicon wafers for the photovoltaic industry. The fund’s three-year standard deviation is 37, which places it high on the volatility scale, and its trailing five-year annualized return is negative 5.9%. Its expense ratio is 0.71%.

First Trust Global Wind Energy ETF

The $186 million First Trust Global Wind Energy ETF FAN holds 50 mid- to large-cap positions, with a primary focus on non-US businesses, as US companies make up just 15% of the portfolio. The top holding is Denmark’s Vestas Wind Systems VWS (9% of assets), which designs, manufactures, installs, and services wind turbines globally. Canadian utilities company Northland Power NPI (7.6%) is the second-largest holding. It develops, owns, and operates a portfolio of energy infrastructure assets, including offshore and onshore wind, solar, natural gas, and battery energy storage systems. The third holding, EDP Renovaveis EDPR (6.8% of assets), is another utilities operator, based in Spain. Over half of the fund is filled with utilities and industrial firms. The fund’s three-year standard deviation of 22.4 is the lowest of all ETFs discussed in this article. Its five-year annualized trailing return is 6.3%, the second highest of the options listed here. First Trust Global Wind Energy ETF’s expense ratio is 0.60%.

Nuclear Energy Powers Ahead

A resurgence of nuclear energy—driven by the war in Ukraine and rising energy demand from data centers—has benefited VanEck Uranium & Nuclear ETF NLR, making it the second-largest ETF in our list with its $2.4 billion in assets under management. The narrow focus of the fund is reflected in its small number of holdings (25), half of which are based in the US. Uranium Energy UEC (7.5%) is the largest holding, followed by Constellation Energy CEG (7.2%) and Canadian company Cameco CCO (7%). VanEck Uranium & Nuclear ETF has generated stellar annualized returns of 24.4% over the past five years and 50% for the year to date, accompanied by a similar standard deviation (26.3) to some other thematic funds.

Investing in the Electricity Grid

As previously mentioned, investing in the clean energy theme today requires looking beyond alternative energy sources. A broader approach means considering the entire value chain and ecosystem—from generation to infrastructure. One area of growing urgency is grid modernization, which is essential to support rising energy demand, particularly from data centers powering AI technologies.

First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index GRID invests in companies primarily involved in electric grid, electric meters and devices, networks, energy storage, and software used by the smart grid infrastructure sector. Boosted by the need to upgrade the domestic electric grid, the fund has grown significantly in recent years, overtaking all clean energy funds, with assets under management reaching $3.2 billion.

The fund holds over 100 names but is as concentrated as the other funds, with its top 10 holdings accounting for 56% of the portfolio. More than half (55%) is invested outside of the US, and industrials (63%) represent the largest sector, followed by utilities (19%) and technology (13%). Swiss company ABB ABBN (8.6% of assets) is the top holding. ABB specializes in electrification, automation, robotics, and digital solutions for industries and infrastructure. The second- and third-largest holdings are US industrial companies Eaton ETN (7.8%) and Johnson Controls International JCI (7.5%). Eaton provides solutions—ranging from smart circuit protection and EV charging infrastructure to grid-scale energy storage—that are essential for integrating renewables and managing rising electricity demand. Johnson Controls International focused on building efficiency and automation.

First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index’s standard deviation of 22.4 is the second lowest among the funds mentioned in this article. Its annualized five-year return is the second highest at 18.6%. Its expense ratio is 0.56%.

Which Funds Align With the Goal of the Paris Agreement?

None of the thematic green funds reviewed here is aligned with a pathway consistent with a 1.5 degrees Celsius global warming scenario. But three—First Trust Nasdaq Clean Edge Smart Grid Infrastructure Index, First Trust Global Wind Energy ETF, and iShares Global Clean Energy ETF—are on a 2.0 C trajectory, aligned with the Paris Agreement. According to Morningstar’s Implied Temperature Rise metric, the three exhibit ITRs of 1.90 C, 1.97 C, and 1.98 C, respectively. The most significantly misaligned fund is the Invesco WilderHill Clean Energy ETF, with an ITR of 2.50 C. Nevertheless, all seven ETFs demonstrate better alignment than the Morningstar US Target Market Exposure Index, which has an ITR of 2.54 C.

Data in this text is as of Aug. 31, 2025.