##  [# Clean Energy ETFs Slump as AI Takes Center Stage ](/sections/features/clean-energy-etfs-slump-ai-takes-center-stage) 

 

# Clean Energy ETFs Slump as AI Takes Center Stage 

 

 

The sector has suffered as investor hype has moved on to more attractive themes.



 

 

 

 

 [![GabeAlpert310x310](/sites/default/files/styles/author_image_icon/public/2023-08/GabeAlpert310x310.png?itok=LtV5mb0-)](/authors/gabe-alpert) 

[By Gabe Alpert](/authors/gabe-alpert)

 Aug 17, 2023

 Edited by: Sean Allocca

 

 

     Share  <a class="a2a a2a_button_email"> Email </a><a class="a2a a2a_button_linkedin"> LinkedIn </a><a class="a2a a2a_button_facebook"> Facebook </a><a class="a2a a2a_button_x"> X (Twitter) </a> 

 

 

 

 

 

 

 

 

  
            googletag.cmd.push(function() {
                googletag.display('js-dfp-tag-article_page_302x26');
            });
    
    

 

 

  

 



 

 

  Loading 

 

 



 

 

Shares of clean energy ETFs have fallen over the past year as hype around more attractive themes, like artificial intelligence, have stolen investors’ attention away from the sector.

Out of the [clean energy](https://www.etf.com/topics/renewable-energy) sector’s 20 exchange-traded funds, only two had positive total returns in the trailing 12-month period, according to etf.com data. The largest, the $3.7 billion [**iShares Global Clean Energy ETF (ICLN**](/ICLN)), is down 28% over the same time frame.

The sector’s sagging returns are likely due to investors moving on to other major themes, making the sector more vulnerable to rising interest rates, according to Eric Balchunas, senior ETF analyst at Bloomberg Intelligence.

“These are thematic, growth-oriented ETFs,” he said, adding that such funds are heavily influenced by trends in investor sentiment. “Investors should be in themes for the long haul if they believe in the underlying investment thesis.”

## Clean Energy ETFs Still Have Sound AUM 

While AI might be the new kid on the block, clean energy ETFs still have $8.9 billion invested in them.

Over the last five years, ICLN has had a 16% annual return, buoyed by the passage of the Inflation Reduction Act, which increased investment in clean energy. This growth surpassed the [**SPDR S&amp;P 500 ETF Trust (SPY)**](/SPY)’s 11% return over the same period.

If growth stocks aren’t being buoyed by investor interest, they can suffer from higher interest rates, which erodes future profit margins. The fall in returns has led to funds exiting the theme, with ICLN alone experiencing $614 million in outflows over the past year, a major reversal.

“Clean energy flows skyrocketed in 2020 and 2021, increasing tenfold,” said Shaheen Contractor, senior ESG analyst for Bloomberg Intelligence. “The sector had to come down.”

*Contact Gabe Alpert at* [*gabriel.alpert@etf.com*](mailto:gabriel.alpert@etf.com)

 
            googletag.cmd.push(function() {
                googletag.display('js-dfp-tag-in_article_unit');
            });
    
    

 

 



 

 

 [ Gabe Alpert ](/authors/gabe-alpert) 

 

 

  Gabe Alpert is a former data reporter at etf.com with over seven years’ experience in financial journalism. He also previously contributed reporting…   [View Bio](/authors/gabe-alpert)

 



 

 


 Related Topics  [Energy](http://www.etf.com/topics/energy) 

 [ESG](http://www.etf.com/topics/esg) 

 [Thematics](http://www.etf.com/topics/thematic-etfs) 

 [Artificial Intelligence](http://www.etf.com/topics/artificial-intelligence)