Obviously, that's a very high number considering the S&P 500 is up 3%. Naturally, you start to wonder where those gains come from. Well, it turns out TAN's current largest holding is a Chinese stock Hanergy Thin Films that has gone on a 500% run and has come under great scrutiny of late.
"Questions have been circling in recent months over Hanergy’s business. Roughly 62% of last year’s sales were made to its privately held parent company, Hanergy Holding Group, according to The Wall Street Journal. Barron’s Shuli Ren writes today that the Chinese financial press are raising more questions about stalled projects and unverified financial deals."Hanergy is also the second largest holding in the Market Vectors Solar ETF KWT as well as the 4th largest in iShares global clean energy ICLN.
Unless you're looking for that dicey, speculative china kicker that's already bubbled up in your passive portfolio, the solar ETF pickings are slim until these funds re-balance at the end of the quarter.
If you're looking for an alternative, The First Trust NASDAQ clean energy ETF QCLN doesn't include any of the Chinese companies, and offers a more broad representation of the clean energy trade. Note it's only up 12% year-to-date
This is just another good reason to always check the holdings, construction and key statistics of any ETF you're considering owning.
Further reading: More from Chris Dieterich at Barron's
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