An ETF for Investing in Clean Energy

We’ve often said that investing in anything that falls along the ESG spectrum of investing ought to be judged purely by performance as opposed to its ability to do good. That’s because fixing the world’s big problems will only happen if we’re able to make a profit along the way which will then allow solutions to scale. No investor wants to subsidize some sector which isn’t able to beat a broader market benchmark. Let’s take clean energy for instance.

While solar installations in the US have grown by 50% annually over the past decade, our reference solar ETF called TAN has posted a dismal return of -31% over the past five years. The S&P 500 has returned +52% over the same period. As investors in the TAN ETF ourselves, we looked into the under-performance two years ago and discovered that the rapid price decrease of solar panels destroyed the margins for many solar providers. Since then, the same trend continues. According to the Solar Energies Industries Association of the U.S., module prices have fallen steadily up until 2017 when import tariffs on solar panels were implemented. The uncertainty