Better Energy ETF: Global X's MLPX Targeting Oil and Gas Infrastructure vs. Invesco's Solar-Focused TAN

The Global X-MLP & Energy Infrastructure ETF (NYSEMKT:MLPX) provides lower-cost exposure to energy infrastructure, while the Invesco Solar ETF (NYSEMKT:TAN) focuses on the volatile solar energy industry.

Energy investors today must weigh the stability of midstream infrastructure against the volatile growth potential of renewable technology. While the Invesco fund targets pure-play solar manufacturers and installers, the Global X fund tracks companies responsible for the transportation and storage of energy products, creating two very different investment profiles for those looking to capitalize on global energy trends and transitions.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Global X fund is the more cost-effective option with a 0.45% expense ratio, saving investors $2.50 annually per $1,000 invested compared to the 0.7% charged by the Invesco fund, offering a clear cost advantage for long-term buy-and-hold investors.

Performance & risk comparison

What's inside

The Global X MLP & Energy Infrastructure ETF focuses its portfolio entirely on the energy sector, specifically targeting midstream infrastructure companies and master limited partnerships. It holds 29 positions that are critical to energy transportation, and its largest positions include Williams Cos Inc at 9.18%, TC Energy Corp at 9.02%, and Enbridge Inc at 8.72%. The fund was launched in 2013 and aims to provide capital appreciation through these stable infrastructure assets, which often demonstrate lower correlation to broader equity markets compared to high-growth tech stocks.

The Invesco Solar ETF provides broader sector exposure with energy at 57%, utilities at 30%, and financial services at 5%. Its top holdings include Nextpower Inc at 10.83%, First Solar Inc at 8.89%, and Enlight Renewable Energy Ltd at 7.61%. The fund manages 36 positions and tracks the MAC Global Solar Energy Index. It was launched in 2008 and remains a pure-play option for renewable energy exposure, though its concentration in a single industry sub-sector can lead to higher volatility for shareholders.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

Investors have more opportunities than ever to invest in the energy industry. The expansion of data centers to support the artificial intelligence boom requires massive amounts of electricity, while a global transition to clean energy makes renewables an attractive investment. Meanwhile, the U.S. war in the Middle East has driven up oil prices.

The Global X MLP & Energy Infrastructure ETF (MLPX) and the Invesco Solar ETF (TAN) provide investors with different options for exposure to the energy sector. Which to pick depends on the factors that matter most to you.

TAN is the clear choice if you want to support the shift to clean energy, or believe the solar sector will see growth in the years ahead. After all, many of the tech giants funding the AI infrastructure buildout seek clean sources of electricity.

However, TAN has demonstrated high volatility, as evidenced by its larger beta and max drawdown. Investing in this ETF requires conviction that the fund will deliver over the long term.

MLPX is a bet on the infrastructure for fossil fuels. The fund is more stable, given its low beta and focus on pipelines and storage facilities rather than the more volatile commodity prices of fuels such as oil. It provides a robust dividend yield, and delivers tax efficiencies by limiting direct MLP exposure. This is the ETF for conservative investors who seek stability and dividend income for the long haul.

Robert Izquierdo has positions in First Solar. The Motley Fool has positions in and recommends Enbridge, First Solar, and Nextpower. The Motley Fool recommends Tc Energy. The Motley Fool has a disclosure policy.