A clean energy ETF soared 50% while everyone moved on

January 10, 2026

Quick Read

ICLN returned 49% over the past year but remains 36% below its 2021 peak after a 57% drawdown.
Bloom Energy alone contributed 48 percentage points of the ETF’s 49% return with a 435% surge.
The fund’s 0.95% dividend yield and high volatility make it unsuitable for income-focused investors.
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The AI boom created an unexpected problem: insufficient electricity for data centers. While investors chased semiconductor stocks, clean energy companies became critical infrastructure, and the market responded.

The AI Power Play Nobody Expected

iShares Global Clean Energy ETF (NYSEARCA:ICLN) delivered a 49% return over the past year, nearly tripling the S&P 500’s 18% gain. The fund tracks approximately 100 global companies in renewable energy, utilities, and clean technology. With $1.9 billion in assets and a 0.39% expense ratio, ICLN provides broad exposure to solar, wind, fuel cells, and electric utilities positioned to benefit from surging power demand.

The return engine is straightforward: these companies generate revenue by producing electricity or the equipment that generates it. As hyperscale data centers proliferate to support AI workloads, power demand forecasts have climbed sharply, creating direct revenue growth for renewable producers and accelerated approval processes for new projects in the U.S. and EU. ICLN’s 49% return significantly outpaced the S&P 500’s 18% gain over the same period.

One Stock Did Most of the Heavy Lifting

ICLN’s top holding, Bloom Energy (NYSE:BE), represents 11% of the portfolio and surged 435% over the past year. That single position contributed roughly 48 percentage points to the ETF’s 49% return. Nextracker (NASDAQ:NXT), the third-largest holding at 7%, doubled with a 108% gain. First Solar, the second-largest position at 8%, gained just 21%.

This concentration reveals a critical tradeoff: ICLN’s performance depends heavily on a handful of winners. When Bloom Energy rallied on fuel cell contracts with tech giants, the ETF soared. But if those top holdings stumble, the entire fund feels it.

Still Recovering From 2021

ICLN peaked near $27 in early 2021 during the clean energy speculation boom, then crashed 57% to $11.60 by January 2025. The recent 49% surge brings the fund to $17.30, still 36% below that 2021 high. This isn’t a breakout—it’s a recovery trade from deeply depressed levels.

This infographic details the iShares Global Clean Energy ETF (ICLN), outlining its investment strategy focused on renewable energy for AI data centers, its performance, and a balanced view of its pros and cons.

Investors must acknowledge three realities. First, the fund remains vulnerable to policy shifts. Clean energy subsidies and tax incentives drive project economics, making the sector sensitive to political changes. Second, many holdings are small-cap companies with limited liquidity and higher volatility than broad market indexes. Third, international exposure to European utilities and Chinese manufacturers introduces currency and regulatory risks absent in domestic-only funds.

Wrong Fit for These Investors

Retirees seeking stable income should look elsewhere. ICLN’s 0.95% dividend yield barely covers inflation, and the fund’s 39% portfolio turnover suggests active rebalancing rather than buy-and-hold dividend growth. The volatility profile, with a 57% drawdown in recent memory, doesn’t align with capital preservation goals.

Short-term traders expecting momentum continuation face timing risk. Much of the surge came from Bloom Energy’s specific contracts rather than sector-wide strength. Without knowing which holdings will lead next, betting on continued outperformance becomes speculation.

Consider QCLN for U.S. Focus

First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN) offers a domestic alternative with 88% U.S. exposure compared to ICLN’s global mix. QCLN holds Tesla and Rivian alongside clean energy pure-plays, blending electric vehicle growth with renewable infrastructure. The fund’s 0.56% expense ratio is higher than ICLN’s 0.39%, but eliminates foreign currency exposure and focuses on companies subject to U.S. regulatory frameworks. With $535 million in assets, QCLN provides similar thematic exposure with more concentrated U.S. positioning.

ICLN works as a tactical bet on AI-driven power demand and global renewable infrastructure buildout, but only for investors comfortable with concentrated positions, international exposure, and the reality that this surge is recovery, not discovery.

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