After a rough couple of years, exchange-traded funds tied to clean-energy generation and distribution are starting to outperform investor vehicles centred on oil and gas exploration and production.
However, over the past month an array of ETFs dedicated to key aspects of the energy transition – from renewable energy generation to smart grid management and uranium extraction – have all posted positive returns just as a major ETF tied to oil and gas output lost roughly 5 per cent. That in turn could potentially accelerate the recent divergence in ETF returns and support clean-energy investing trends while undermining the appeal of fossil fuels.Over the past five years or so, investment vehicles tied to clean energy have endured a roller-coaster ride.
These restrictions led to major project delays and component cost rises just as widespread interest-rate increases curbed consumer purchasing and borrowing power, and resulted in a slowdown in renewable infrastructure build-out across several regions. ETFs tied to electric grid upgrades and smart power management systems also made gains in 2023, as awareness about the challenges of incorporating renewable energy into existing grid systems sparked major utility-scale investments.