Have you been thinking about investing your money in green energies but are not sure where to start? Adding some green Exchange Traded Funds, or ETFs, to your portfolio could be the ideal strategy for you if you would like to invest more responsibly while gaining exposure to a strong sector.

[dropcap]T[/dropcap]here are several good reasons for investing in clean energies:

1. Unlimited supply.

Renewable sources of energy do not rely on a limited supply like other types of energy. Investing in oil, natural gas, or coal can be profitable for now, but green energies will still be around when natural resources are depleted.

 

 

2. Cost. The cost of producing green energies is predictable.

As the technology becomes more efficient, the cost is even likely to go down. Cost fluctuations are also less likely than in other forms of energy that greatly depend on the availability of a limited resource.

 

 

3.  Investing in green energies is a socially responsible gesture.

You won’t have to worry about your money financing projects that will have negative consequences on the environment.

Green Energy ETFs

You can gain exposure to green energies with several types in investment products, but Exchange Traded Funds are some of the best financial products to add to your portfolio.

 

Consider these advantages of ETFs:

1. Exchange Traded Funds trading is very easy. The prices of these funds are adjusted on a daily basis, which means every investor who purchased shares within the same day got the same price. This is an ideal option if you are investing for the long-term and do not want to actively manage your portfolio.

2. ETFs give you access to diversification. You can choose from hundreds of funds and gain exposure to many different indexes, markets, and industries. You can easily gain exposure to foreign markets as well.

3. Higher overall returns. Fees are relatively low compared to other products. Plus, Exchange Traded Funds often perform better than other managed funds because they can cover a broader range of products.

Even though past performance doesn’t predict future returns, a smart strategy is to focus on building a solid basis with top-performing funds. You can choose to take more risks by investing in other products once you can rely on the solid foundation you built.

 

These are some of the best green ETFs you can invest in to develop a solid foundation:

1. The First Trust NASDAQ Clean Energy Green Energy Index
2. The Market Vectors Global Alternative Energy Fund
3. The Guggenheim Solar Exchange Traded Fund
4. The iPath Global Carbon Fund
5. The Powershares Widerhill Clean Energy Fund
6. The Global X Uranium Fund
7. The First Trust Global Wind ETF
8. The First Trust NASDAQ Clean Edge Green Fund
9. The Market Vectors Rare Earth Strat Met ETF
10. The iShares KLD 400 Social Index Fund

These funds have been performing well since the holdings are typically concentrated on large green companies that have been dominating this industry.

For instance, the five best performing holdings of the First Trust NASDAQ Clean Energy Green Energy Index account for 40% of the yield (Tesla Motors, SunEdison, Linear Technology Corporation, ITC Holdings Corp, and First Solar).

Some of these funds make a great addition to your portfolio because they allow you to invest in a wide range of green companies.

For instance, the Market Vectors Global Alternative Energy Exchange Traded Fund includes holdings from U.S companies such as Tesla Motors and Eaton Corp, while providing you with exposure to the Chinese solar market with China Longyuan Power Group Corp and the Hong Kong market with Gcl-Poly Energy Holdings.

If you are considering any of these investments, take the time to review the past performances and the holdings of these different Exchange Traded Funds. Ensure the funds you select correspond to your goals in terms of revenues and risks.