Exchange-traded funds (ETFs) provide investors with a great way to benefit from the growth of a particular industry or segment. You can even buy an ETF to try and mirror a particular exchange.
It is helpful if you don't know enough about certain stocks but are looking to gain exposure to a particular area. A great example of that is alternative energy.
Investors may not know what to invest in to tap into that sector or which stocks are best, and that's where an ETF can help. If you are bullish on alternative energy, in particular, hydrogen, then Defiance Next Gen H2 ETF (NYSEArca:HDRO) is a fund you will want to check out.
The ETF began trading last week and it is a great option for long-term investors who are looking to buy and hold for years. The hydrogen market is growing in popularity but it may take years – decades even, before it generates much of our energy. Investing now can be a great way to get in (very) early.
And with U.S. President Joe Biden pushing greener initiatives, this ETF could become a hot buy under his administration. With 25 holdings, this isn't a large fund.
Plug Power (NASDAQ:PLUG) accounts for more than 13% of its total holdings, followed by Fuelcell Energy (NASDAQ:FCEL) at just under 10%. Ballard Power Systems (NASDAQ:BLDP) rounds out the third spot, making up more than 7% of the ETF's weight.
With an expense ratio of 0.30%, the fund is moderately priced as there are cheaper ETFs out there but it still won't be a big drain on your overall return.
