Tuesday, December 11, 2007

More on Powershares CleanTech (PZD)

This is a link to Powershares CleanTech Fund . It's instructive to take a look at its composition. Besides my bullish opinion on CleanTech, it's also a nicely diversified portfolio of companies, which limits to cyclical and industry risk to a certain extent (though not entirely, obviously). PZD invests in machinery, semi-conductors, equipment, energy services and chemicals (between 7 and 19%) in each, so it's not purely solar companies or utilities that you might imagine when you buy a fund like this.

The expense cap is 60 basis points, which is fair for specialty fund holding a lot small and mid-cap stocks. Of course, since it's an ETF, having to pay a trade charge when you get in and out stings a bit.

My only concern is that I'm late to the game on this one. The biggest holding is First Solar, which has recently done extremely well. The portfolio has done extremely well this year. Performance and cash in-flows are both strong thus far. With the demand for energy and the continued interest of investors, I don't think this is a bubble. While returns probably won't be as high as they have been this year, Clean Tech is a bet I like.

Of course, I'd love to hear your thoughts on this fund!

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