Looking to add to your investment strategies? Energy Exchange-Traded Funds are an excellent way to diversify your portfolio. Here’s the in-depth comparison of QCLN vs. ICLN.
QCLN vs. ICLN are two energy-based ETFs that are very popular securities for long-term investors. These energy ETFs invest mainly in oil, natural gas, and energy companies.
QCLN focuses more on green energy companies listed in the Nasdaq Index, while ICLN focuses on clean energy companies listed on the S&P 500. So if you are interested in investing in Green Securities, like some people like to call them, QCLN and ICLN are two popular ETFs you might want to look at.
Below, we’ll do a detailed review of QCLN vs. ICLN to establish their differences, similarities, competition, and performance differences. We will also furnish you with notable information about them to better help you decide which to go for.
At the end of the review, we hope that all your questions will be answered and the decision will be yours to make.
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QCLN: First Trust NASDAQ Clean Edge Green Energy Index Fund
QCLN or First Trust NASDAQ Clean Edge Green Energy Index Fund is an ETF created and issued by First Trust. This asset management company is known for creating security portfolios, and they are highly rated in the finance industry.
The fund’s primary goal is to replicate the performance of all stocks listed in the US market. Essentially, QCLN only tracks green energy companies listed in the Nasdaq. These companies may operate at any level across the service value chain from development to manufacturing, distribution, and installing green energy technologies.
These technologies could be advanced battery systems, fuel cells, electric cars, wind vanes, photovoltaics, and many more. So if you skim through the stock holdings of QCLN, you will notice that all the stocks are of companies active in the green energy industry.
QCLN invests in green energy stocks that can produce results that will generally replicate the yield and price of the Nasdaq Liquid Series Equity Index.
Let’s take a look at the top ten holdings of QCLN with 56.10% of the total assets:
|ON Semiconductor Corp.
|NIO Inc. ADR
|Emphase Energy Inc.
|XPeng Inc. ADR
|SolarEdge Technologies Inc.
|Plug Power Inc.
|Brookfield Renewable Partners L.P.
Issued by iShares, ICLN or iShares Global Clean Energy ETF is another energy-based ETF with a vast circulation ratio. The fund managers of this ETF invest in global energy companies that focus on biofuels and green energy in general like ethanol, solar, wind technologies, hydroelectricity, and geothermal.
Besides investing in these companies, ICLN invests in companies that develop the technology and equipment used in the green energy industry. An index committee selects the stocks, and each stock is weighted and issued a score based on several factors and market constraints.
The weighted average does not remain static but is analyzed and reconfigured semi-annually. Should you invest in this ETF, bear in mind that you will be holding onto stocks issued by companies that operate in the clean energy industry.
Also, note that the fund invests at least 80% of its assets into green energy stocks. So far, based on estimates by various groups, ICLN has holdings in 76 different clean energy companies.
Let’s look at ICLN’s top ten holdings with 53.24% of the total assets:
|Enphase Energy Inc.
|Vestas Wind Systems
|Consolidated Edison Inc.
|SolarEdge Technologies Inc.
|Plug Power Inc.
|EDP Energias De Portugal SA
|Xinyi Solar Holdings Ltd.
As you can see from both the tables, even though both ETFs are focused on tracking green companies, their top holdings paint a slightly different picture since they don’t track the same stocks.
QCLN Vs. ICLN: Key Differences
QCLN vs. ICLN are both ETFs and are energy-focused. However, they have more than a few differences that set them apart. For starters, QCLN is issued by First Trust Nasdaq, while iShares issues ICLN.
While QCLN tracks only publicly traded companies in the US stock market, ICLN has a global scope as it tracks US and non-US stocks.
Another difference between both ETFs is that QCLN focuses on manufacturers, developers, distributors, and installers of green technology. But for ICLN, the main focus is the production process. They track companies that are into clean energy production and other related technologies.
Although they track similar companies, when you review the profile of some of their top holdings, you will notice how both of them have different stock positions.
Also important to note when discussing their difference is their expense ratios. QCLN has a higher expense ratio of 0.60% than ICLN’S ratio of 0.46%. It means that for every $10,000 you invest, you pay $60 annually if you invest in QCLN and $46 if you invest in ICLN.
If you are familiar with the expense ratio of funds, you will notice that these ETFs have higher expenses. However, they don’t just copy an index like many other index funds do. They analyze companies and only invest in the companies that meet their standards. Because there’s a lot more work involved, their expense ratio is higher.
QCLN Vs. ICLN: Composition Differences
Let’s review the composition of QCLN vs. ICLN.
|24 June 2008
|14 February 2007
|Global Clean Energy S&P Index
|Nasdaq Clean Energy Index
QCLN Vs. ICLN: Performance Differences
How do they stack up against each other performance-wise? The best way to find out is to track and review their past performances over the last 10 years.
QCLN Performance & Returns
ICLN Performance & Returns
QCLN Vs. ICLN: Fees
When investing in securities, experienced investors like to know what fees they have to pay as this information is essential. So if you are interested in investing in these ETFs or any asset for that matter, you want to be sure that the fees are affordable
For First Trust’s QCLN, the management fee is 0.60% which translates to $60 for every $10,000 invested. For ICLN, the management fee is 0.46% which translates to $46 for every $10,000 investment.
These fees are the expense ratios you are expected to pay every year for as long as you hold the securities.
QCLN Vs. ICLN: Frequently Asked Questions
Here are some questions to help you better understand QCLN and ICLN.
Is QCLN A Good ETF?
Yes, it is when you look at several historical records. It has done very well over the last few years. For instance, it posted a return of 29.30% over the last five years, which is quite impressive. It also has an impressive portfolio of stocks by different energy companies.
What Companies Are In QCLN?
The ETF has so many stocks by different investment companies. Some of its holdings include Plug Power Inc, Neo Inc, SolarEdge Technologies, XPeng Inc, and many more.
Although the portfolio is not as diversified as others since it is largely limited to clean energy companies, the stocks have good potential for growth. Especially as the world is gradually moving towards clean energy sources and away from fossil fuels.
QCLN Vs. ICLN: A Comparison of Two Clean Energy ETFs
Despite the volatility of the energy market, your investment strategy could include one of these ETFs. Having a diversified portfolio will ensure that you reach your ultimate goal of financial freedom. But before investing, check your liquidity first.
Do you have enough capitalization? Remember that good investment management should include how much money you are willing to risk. Now that you have understood the ins and outs of these ETFs, you know a lot more to base your investment decision on.
Now is the time to choose. Remember that investing is always risky. But with the proper research and study, you will be able to mitigate that risk and reach financial independence as soon as possible. Investing is challenging, but why can’t you if others have done it?
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Founder of Spark Nomad, Radical FIRE, Journalist
Expertise: Personal finance and travel content
Education: Bachelor of Economics at Radboud University, Master in Finance at Radboud University, Minor in Economics at Chapman University.
Over 200 articles, essays, and short stories published across the web.
Experience: Marjolein Dilven is a journalist and founder of Spark Nomad, a travel platform, and Radical FIRE, a personal finance platform. Marjolein has a finance and economics background with a master’s in Finance. She has quit her job to travel the world, documenting her travels on Spark Nomad to help people plan their travels. Marjolein Dilven has written for publications like MSN, Associated Press, CNBC, Town News syndicate, and more.