Are Green Energy ETFs Really Hitting Their Stride?

Should we measure the success of every investment off the March bottom? Of course not! Most folks understand that the hardest-hit investments ricocheted the highest off the floor.

Sure, steel companies in Market Vectors Steel (NYSE: SLX) galvanized fans with 185%+ gains off March 9, 2009 lows. Yet SLX is still -38% below its June 08 peak. (Does SLX have room to run or is the reflation trade done!)

Similarly, a variety of alternative/clean/progressive energy funds are hitting 52-week highs. Moreover, advocates are celebrating the success of "green" investments since... well, since March 9, 2009.

Since the infamous date, Market Vectors Global Alt Energy (NYSE: GEX), PowerShares WilderHill Clean Energy (PBW) and Claymore Global Solar Energy (NYSE: TAN) have rocketed 80%, 100% and 140% respectively. In contrast, old stodgy, Global Energy (NYSE: IXC) has risen 60%.

Here's where investors need to be a bit more "in touch" with longer-term results. If you go out 2 years, IXC has nearly recovered its credit crisis losses. The green energy investments? Hardly.

More telling, Global Energy (NYSE: IXC) has a 5 year total return of 60%. The total return for PowerShares WilderHill Clean Energy (NYSE: PBW) is -25%. Ouch!

Theoretically, green energy investing is a natural place to look for investment gains going forward. According to Tom Lydon, Obama's $2.3 billion tax credit for clean energy manufacturing will benefit 183 facilities across 43 states.

Nevertheless, I caution folks against falling in love with an idea. The dot-com "New Economy" left a lot of people wondering how the NASDAQ led them astray. "New Energy" is indeed coming, but old energy (e.g., discovery of nat gas and oil reserves) is far from finished.

 

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Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The company does not receive compensation from any of the fund providers covered in this feature. Moreover, the commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.