Beware of Over-Diversification in Green ETFs: Canadian Solar Inc. (CSIQ) and More

Holdings are nicely diversified between industrials at 39.2%, energy at 34.0%, utilities at 22.3%, and financials at 4.4%. On US exchanges it is difficult to invest in uranium outside of miners and utilities, but this ETF offers a good amount of exposure into the construction firms. The biggest holding is the Japanese construction firm Mitsubishi. After the Fukushima disaster, the firm faced a big drop in their nuclear order book but already domestic demand has come back. Cameco Corporation (USA) (NYSE:CCJ) is a very profitable Canadian uranium miner and it is the second biggest holding.

Conclusion

ETFs offer security through diversification, but it is important that the underlying companies and industries are strong. Market Vectors Nuclear offers positions in strong miners, construction firms, and utilities with high barriers to entry. Market Vectors Global Alternative Energy is exposed to a number of industries, and its main holdings are profitable industrials firms.

The article Beware of Over-Diversification in Green ETFs originally appeared on Fool.com and is written by Joshua Bondy.

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