2 Top ETFs to Play the Energy Boom
Key Points
First Trust North American Energy Infrastructure Fund has a higher expense ratio and lower historical volatility compared to the Invesco Solar ETF.
Invesco Solar ETF concentrates on the solar industry, while First Trust North American Energy Infrastructure Fund balances energy and utility infrastructure.
First Trust North American Energy Infrastructure Fund pays a dividend and more stable, while the Invesco Solar ETF comes across as a high-risk, high-return growth play.
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Investors seeking to capitalize on the transition to cleaner energy sources often face a choice between specialized technologies and broader infrastructure. While the Invesco Solar ETF (NYSEMKT:TAN) provides concentrated exposure to the solar power supply chain, the First Trust North American Energy Infrastructure Fund (NYSEMKT:EMLP) invests in energy infrastructure, such as utilities and pipelines. This comparison explores how these two strategies differ in terms of volatility, cost, and asset concentration.
Snapshot (cost & size)
| Metric | TAN | EMLP |
|---|---|---|
| Issuer | Invesco | First Trust |
| Expense ratio | 0.70% | 0.95% |
| 1-yr total return (as of June 2, 2026) | 127.1% | 19.6% |
| Dividend yield | N/A | 2.8% |
| Beta | 1.36 | 0.56 |
| AUM | $2.3 billion | $3.9 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The First Trust fund is the more expensive of the two, with a 0.95% expense ratio, compared to 0.70% for the Invesco fund. This 0.25 percentage point difference reflects the additional costs associated with active management and specialized research into infrastructure. For investors prioritizing low-cost passive indexing, the Invesco fund offers a more affordable way to bet on the clean energy sector.
Performance & risk comparison
| Metric | TAN | EMLP |
|---|---|---|
| Max drawdown (5 yr) | (74.00%) | (14.60%) |
| Growth of $1,000 over 5 years (total return) | $940 | $2,086 |
What's inside
The First Trust North American Energy Infrastructure Fund (NYSEMKT:EMLP) is an actively managed portfolio that focuses on the physical assets required to move and store energy. Its sector allocation is balanced primarily between energy at 48% and utilities at 47%, with a small 4% slice in industrials. Its largest holdings include Energy Transfer (NYSE:ET) at 7.51%, Enterprise Products Partners (NYSE:EPD) at 7.24%, and MPLX (NYSE:MPLX) at 4.2%. Launched in 2012, the fund holds 63 securities and utilizes an ESG screen to refine its selection of energy infrastructure companies.
The Invesco Solar ETF (NYSEMKT:TAN) was launched in 2008 as a thematic fund that concentrates exclusively on the solar energy industry. It tracks the MAC Global Solar Energy Index and maintains a more concentrated portfolio of 32 holdings. Its sector exposure is tilted toward energy at 57%, utilities at 22%, and technology at 10%. Its largest positions include First Solar (NASDAQ:FSLR) at 12.1%, Nextpower (NASDAQ:NXT) at 9.73%, and Enphase Energy (NASDAQ:ENPH) at 9.44%.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
The Invesco Solar ETF and the First Trust North American Energy Infrastructure Fund sit broadly within the energy space, but their purposes and holdings differ significantly.
As the name suggests, the Invesco Solar ETF is a solar pure-play, investing in companies that provide solar power modules, inverters, installation services, and materials. Solar is among the fastest-deployable clean energy sources and is gaining rapid traction amid the artificial intelligence data center build-out. The U.S. Energy Information Administration predicts that solar photovoltaics will account for 80% of the global increase in renewable energy capacity through 2030.
The First Trust North American Energy Infrastructure is a much broader ETF, giving investors exposure to companies across several energy verticals, including natural gas pipelines, crude storage, utilities, and electric power transmission. Because most companies in these industries pay dividends, this ETF should appeal more to income investors than the Invesco Solar ETF.
The Invesco Solar ETF has crushed the First Trust North American Energy Infrastructure Fund in the past one year as solar finally gets attention after some brutal years.
TAN data by YCharts
However, because the global solar industry’s fortunes are heavily tied to regulatory environments, supply chain costs, and interest rates, the fund can deliver big returns during periods of optimism but can also be prone to steep multi-year drawdowns. The First Trust ETF behaves more like a fixed-income play, with lower volatility, due to a diversified portfolio focused on “toll-booth” companies that collect fees for services.
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends First Solar and Nextpower. The Motley Fool recommends Enphase Energy and Enterprise Products Partners. The Motley Fool has a disclosure policy.
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