Most clean energy ETFs promise broad exposure to the energy transition. ALPS Clean Energy ETF (NYSEARCA:ACES) goes further, bundling solar manufacturers, battery storage companies, EV makers, hydrogen plays, and lithium miners into a single 38-stock fund. Whether that breadth serves investors depends on what they’re trying to accomplish.
What ACES Is Built to Do
ACES is a thematic growth ETF targeting the full clean energy ecosystem across North America. With 32% of the portfolio in Industrials and meaningful exposure to Information Technology, Utilities, Materials, and Consumer Discretionary, this is not a utility income play. It’s a bet on structural secular growth across interconnected clean energy subsectors.
ACES is built for patient investors; its 39% annual turnover rate reflects a buy-and-hold approach rather than active trading, and the 0.55% expense ratio is reasonable for a thematic fund. At $117.1 million in net assets, the fund is on the smaller side, which can translate to wider bid-ask spreads during volatile markets, a practical consideration when sizing positions.
Does It Deliver?
ACES has delivered strong recent performance, returning 38.2% over the past year — well ahead of the S&P 500’s 12.95% — driven by the clean energy sector’s recovery from its 2021-2023 drawdown. That recovery reflects renewed investor confidence in the energy transition as rate cuts eased pressure on growth valuations.
The short-term momentum continues into 2026, with ACES up 9.13% year-to-date, though it has trailed the more globally diversified iShares Global Clean Energy ETF‘s 15.09% YTD gain, suggesting North American-focused exposure has been a relative drag. The five-year return of -59.34% is a sobering reminder of how deeply the sector sold off during the rate-hiking cycle, and how much ground remains to be recovered for longer-term holders.
The rate environment provides a tailwind. The Fed cut rates three times between September and December 2025, bringing the federal funds rate to 3.75%, while the 10-year Treasury yield sits at 4.08%, down 34 basis points year-over-year. Lower rates reduce financing costs for capital-intensive renewable projects and ease valuation pressure on growth holdings.
The Tradeoffs
Policy concentration risk: Much of the fund’s recent momentum traces to Biden-era clean energy tax credits. A reported June 30, 2026 deadline for credits under the One Big Beautiful Bill Act creates a near-term catalyst but also a potential cliff, and the current administration’s posture toward clean energy adds headline volatility.
Holdings quality spectrum: ACES spans profitable infrastructure operators and pre-revenue micro-caps in the same portfolio. Names like Plug Power and Lucid sit alongside Brookfield Renewable, creating wide fundamental dispersion that amplifies volatility beyond what the sector alone would produce.
Minimal income: With a 0.46% dividend yield and a quarterly distribution of $0.0911 per share as of December 2025, ACES offers almost no income cushion during drawdowns.
ACES carries characteristics typically associated with satellite growth allocations: a 5-plus year thematic focus, concentrated clean energy exposure, and significant policy sensitivity. Its uneven holdings quality and history of prolonged, deep drawdowns are factors analysts typically weigh when assessing suitability for core versus satellite portfolio roles.