11 Best Clean Energy ETFs in Canada

Clean energy ETFs are one of the most sought-after investments right now in Canada.

With the increasing concerns over climate change in recent times, the world is paying more attention to the clean energy industry, thereby making clean energy ETFs one of the biggest investment hotbeds right now.

As renewable energy continues its journey towards phasing out traditional energy sources and our dependence on them, the clean energy ETFs space is definitely one to watch.

The growth in demand for clean energy is now an investment opportunity for many, and you can be one of them.

ETFs (Exchange-Traded Funds) are an investment type that allows you to diversify your portfolio with different classes of assets including bonds and stocks.

In this article, we have taken our time to properly research the top-of-the-line and very best clean energy ETFs in Canada, we will discuss their features, what makes them special, and how you can invest in this market right now in 2022.

Without further ado, let’s discuss the best clean energy ETFs in Canada. 

Best Clean Energy ETFs in Canada

Clean energy exchange-traded funds are ETFs that invest in stocks within the energy sector. These include solar energy, hydroelectric, wind, and geothermal companies.

The following are the 11 best clean energy ETFs in Canada:

1. Harvest Clean Energy ETF (HCLN)

HCLN is a clean energy ETF that is listed on the Toronto Stock Exchange (TSX). It offers investors a diverse assortment of global clean energy organizations. With 40 diverse holdings in North America, Europe, New Zealand, and Asia, it is an equally-weighted ETF.

On a semi-yearly basis, the fund is balanced and managed passively.

A management fee of 0.40% is to be paid. Also, the MER is 0.68%. Both fee percentages are fair, but still quite expensive for an ETF.

Here are some other facts you should know about HCLN:

• The management fee is 0.40%
• The MER is 0.68%
• There are 40 stocks in this fund
• There is no dividend yield
• The distribution frequency is annual
• AUM is $59.2 million
• 1-year performance is 20.57%

2. BMO Equal Weight Utilities Index ETF (ZUT)

BMO has its very own utility index ETF for Canadian investors. It provides exposure to sixteen reputable Canadian utility companies.

Like the ETF iShares, ZUT is equally weighted as well. Within it are companies like Brookfield, Altagas, and Fortis.

The distributions are regularly increased annually and paid out on a monthly basis.

The ZUT is acknowledged for its steady returns since when it started in 2010. The maximum management fee per year is 0.55% (plus an MER of 0.61%).

ZUT is traded on the Toronto Stock Exchange (TSX) and the value is in Canadian dollars. It is definitely one of the best clean energy ETFs in Canada.

Here are some other facts you should know about ZUT:

• The MER is 0.61%
• There are 16 stocks in this fund.
• The dividend yield is 3.38%
• The distribution frequency is monthly
• AUM is $476.15 million
• 1-year performance is -0.71%

3. iShares S&P/TSX Capped Utilities Index ETF (XUT)

Some clean energy ETFs do not only focus on clean energy companies and organizations. An example is the Blackrock iShares ETFs that align with Capped Utilities Index.

Further exploration indicates that XUT currently holds 10 of the large reputable utility companies in Canada.

Utility companies are often reliable performers that use strong dividends to take the place of growth. The XUT fund sends distributions every month with a 0.55% management fee (plus an MER of 0.61%).

The XUT has produced gains steadily on a yearly basis (plus a cumulative return of 134%, dividend reinvestment not included). This has been the case since they started in 2011.

Here are some other facts you should know about XUT:

• The MER is 0.62%
• There are 18 stocks in this fund
• The dividend yield is 3.4%
• The distribution frequency is monthly
• AUM is $258 million
• 1-year performance is 5.75%

4. iShares Global Clean Energy ETF (ICLN)

The iShares ETFs are great options if you are searching for clean energy investment, and the ICLN fund is the kind of iShares ETF that will get you this.

With up to 76 of the big clean energy companies worldwide being held by ICLN, it is undoubtedly one of the best clean energy ETFs in Canada.

The companies being held include Vestas Wind Systems (which happens to be the major weighted holding at a huge 8.78%) and Enphase Energy (which makes up 8.12% in total).

It is worth mentioning that iShares has added big weighting for stocks of the semiconductor kind. Many other clean energy funds do not possess this.

The distributions are sent out on a semi-yearly basis in January and then June. If a more consistent flow of cash is what you are looking for, then a fund that pays its distributions monthly (not semi-annually) would be best for you.

Here are some other facts you should know about ICLN:

• The MER is 0.42%
• There are 76 stocks in this fund
• The dividend yield is 1.34%
• The distribution frequency is semi-annual
• AUM is $4.9 billion
• 1-year performance is -23.8%

5. Invesco Solar ETF (TAN)

Another popular and performing clean energy ETF that you could consider investing in is the TAN.

TAN is primarily focused on solar energy companies and it is worth your consideration as one of the best clean energy ETFs in Canada.

TAN comprises 44 solar companies worldwide. The allocation for US stocks is 46%, Chinese stocks at 22%, and the rest of the allocation is for other markets globally.

There is a management fee of 0.50% for this clean energy ETF (plus a total expense ratio of 0.66%).

As an ETF specifically for solar, TAN is particularly ideal for individuals who are convinced that solar energy is the best option for renewable energy on our planet.

Companies like Tesla cannot be considered part of this because the solar industry is not their main focus (even though they function in the solar industry via their Powerwall product).

The New York Stock Exchange is the trading home of this fund, and it is therefore valued in United States dollars.

Here are some other facts you should know about TAN:

• The MER is 0.66%
• There are 44 stocks in this fund
• The dividend yield is 0.55%
• The distribution frequency is annual
• AUM is $2.27 billion
• 1-year performance is -24.69%

6. First Trust Global Wind Energy ETF (FAN)

In debates about how clean energy can be propagated, wind energy so often takes a back seat. But it is actually a valid option for renewable energy.

With wind farms being built in a growing number of nations (especially in coastal oceans in order to harness nautical winds), wind energy could experience a substantial rise in popularity.

The turbines generate huge amounts of energy that are used in powering industries and civil infrastructure of different kinds.

First Trust is responsible for the FAN ETF, and it currently holds 48 important and reputable wind companies including Siemens Gamesa, Boralex, and Vestas.

Distributions are paid out by the fund every quarter (with a 1.05% yield).

An expense ratio of 0.60% is put in place by First Trust. It trades on the NYSEARCA index and it is valued in United States dollars.

Here are some other facts you should know about FAN:

• The MER is 0.60%
• There are 48 stocks in this fund
• The dividend yield is 1.93%
• The distribution frequency is quarterly
• AUM is $347.93 million
• 1-year performance is -19.16%

7. BMO Clean Energy ETF (ZCLN)

This ZCLN is a clean energy ETF managed by the Bank of Montreal, and it tracks the S&P Global Clean Energy Index.

The BMO Clean Energy ETF, or ZCLN, comprises 76 diverse assets that are from developing markets and developed markets alike.

The weighted stock that is highest in this fund is Vestas Wind Systems (a Danish energy company). The company has an 8.69% position currently.

With the BMO Clean Energy ETF, different clean energy markets get exposure (including some companies that deal in oil and gas refining).

The ZCLN ETF is traded on the Toronto Stock Exchange (TSX) and it is valued in Canadian dollars (CAD). This makes it a good option for people who want to invest in the best clean energy ETFs in Canada that are global.

Here are some other facts you should know about ZCLN:

• The MER is 0.40%
• There are 76 stocks in this fund
• There is no dividend yield
• The distribution frequency is annual
• AUM is $66.25 million
• 1-year performance is -36.88%

8. First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN)

Thanks to First Trust, there is now an innovative way for investors to become acquainted with the clean energy industry via the QCLN fund.

The clean energy ETF (which spreads across the globe) comprises reputable companies like NIO, XPeng, and Tesla. Clearly big names from the sector of electric vehicles. It is an ETF with a strong focus on tech.

QCLN currently holds 60 diverse stocks. 74% of its holdings are from the United States market. It is traded on the Toronto Stock Exchange and is valued in CAD.

Key Facts as of January 2022 for QCLN are:

• The MER is 0.79%
• There are 60 stocks in this fund
• The dividend yield is 0.40%
• The distribution frequency is quarterly
• AUM is $14.7 million
• 1-year performance is -25.75%

9. ALPS Clean Energy ETF (ACES)

This clean energy ETF made by ALPS primarily focuses on companies in North America. American stocks make up 74% of the fund while Canadian stocks make up 26%.

Within ACES, there is a part that focuses on electric vehicles. However, most of its focus is on 100% clean energy companies.

Set up in 2018, ACES is not a veteran in the ETF space. Distributions are paid out quarterly while the management fee is 0.55%.

Here are some other facts you should know about ACES:

• MER is 0.55%
• Number of stocks is 44
• Dividend yield is 0.8%
• Distribution frequency is Quarterly
• AUM is $874.4 million
• 1-year performance is -19.31%

10. Invesco WilderHill Clean Energy ETF (PBW)

Invesco are the brains behind the PBW clean energy ETF. It is based on the WilderHill Clean Energy Index (WCEI). The WCEI is an index of international companies in the clean energy industry (it is also an independent body).

Roughly 90% of PBW’s funds are invested in stocks that belong to the WilderHill Clean Energy Index. Also, companies in the industrial sector have an advantage when it comes to weighting.

About 80 companies are currently held by PBW. These companies include Nio, Rivian, Tesla, and other.

Here are some other facts you should know about PBW:

• MER is 0.50%
• Number of stocks is 80
• Dividend yield is 3.77%
• Distribution frequency is Quarterly
• AUM is $1.56 billion
• 1-year performance is -52.9

11. KraneShares Global Carbon Strategy ETF (KRBN)

With the KraneShares Global Carbon Strategy ETF, you can invest in cap-and-trade carbon contracts.

Investing in cap-and-trade carbon contracts is made possible by KraneShares’ intricate system of futures contracts.

KRBN tracks prices of credits in carbon markets (for example, the California Carbon Allowances and the European Union Allowances). As a result of their tracking, they have made impressive returns.

How To Buy The Best Clean Energy ETFs in Canada

There are quite a number of Canadian brokerage platforms that let you buy ETFs and stocks.

Among the very best are QTrade Direct Investing, Wealthsimple Trade, and Questrade. So, we are going to compare these platforms with the table below and see how they stack up against each other:

Read our article to know more about how Questrade compares to Wealthsimple head-to-head. You could also read our QTrade Review, Wealthsimple Trade review and our Questrade review.

Benefits and Downsides of Clean Energy ETFs

Like many things in life, clean energy ETFs have their pros and cons. This section of this article will let you know the benefits and downsides of investing in clean energy ETFs.

Pros

• You get to invest in a wide variety of stocks
• You get to spread out your investment risk
• Clean energy ETFs are environmentally friendly

Cons

• Some ETFs are not 100% clean energy
• Clean energy ETFs are still relatively new, so their long-term potential are yet to be put to the test

Are Clean Energy ETFs a Good Investment?

The popularity of the renewable energy sector looks certain to grow in the coming future.

Do not be surprised to see clean energy companies getting the same amount of attention oil companies were getting in the past. A major shift towards renewable energy is an exciting likelihood for many.

Clean energy ETFs give you a chance to invest in a broad variety of stocks and expose you to different corners of the sector. If you are not a fan of putting all your eggs in a few baskets, ETFs are a great option for you.

Conclusion on Best Clean Energy ETFs in Canada

With growing global consciousness about climate change and the environment, it is no surprise that a boom in the clean energy industry is imminent.

Clean energy investments are a great choice for Canadians who want to invest in ethical industries that are committed to healing the environment while at the same time getting long-term returns on their investments.

Many believe investing in clean energy is an ethical way of making money, so it’s a win-win for the environment and your purse.

Hopefully, this article on the best clean energy ETFs in Canada will help you choose the one that suits you and your goals.

FAQs on Best Clean Energy ETFs in Canada

What is the Best Clean Energy ETF for Canadians?

It all boils down to what suits you and which ETF you deduce will be profitable to you. Assess the ETFs provided in this article and try to make an informed decision.

You can start with the Harvest Clean Energy and the BMO Equal Weight Utilities Index and take it from there if you like.

Check out our article on the best dividend ETF in Canada.

Does Vanguard Have a Clean Energy ETF?

Even though it is one of the most common ETF providers in the market, Vanguard does not have a 100% clean energy fund.

What is the Largest Renewable Energy Company in Canada?

The prime clean energy company in Canada is Enbridge. This company has a market capitalization of almost $90 billion in US dollars. It is the biggest pure energy company out there at the moment.