Get TAN... in your portfolio and later on the beach

Solar energy is as hot as the sun, with high energy prices and strong demand from rapidly growing economies outstripping oil supplies Too much sun, not enough green. The solar sector of '08 is going to be a lucrative wave which will be very comparable to the the tech sector of the '90's.


TAN is a Global Solar Equity Index which i cannot boast enough about. There is no portfolio with which this ETF does not belong.

The fund really is global: China is the largest country represented in the fund, at 29.91%, followed by Germany at 29.01% and the U.S. at 26.33%. Still, ex-U.S., TAN invests in only five countries.

The methodology for index construction is to select from companies that "specialize in providing solar energy products and services," subject them to common liquidity screens and then weight them by market capitalization (actually a modified market-cap weighting so that no one company has too great a weighting).

The fund has a weighted average market cap of $5.8 billion, a P/E of 44, 25 holdings and a cap on the expense ratio of 0.65%.

Tan Holdings:

FIRST SOLAR INC 8.85 %
RENEWABLE ENERGY CORP AS 7.72 %
Q-CELLS AG 6.52 %
SUNTECH POWER HOLDINGS ADR 5.91 %
SOLARWORLD AG 5.42 %
JA SOLAR HOLDINGS CO LTD 5.21 %
LDK SOLAR CO LTD-ADR 4.80 %
SUNPOWER CORP-A 4.72 %
YINGLI GREEN ENERGY - ADR 4.60 %
MEMC ELECTRONIC MATERIALS INC 4.58 %
SOLARIA ENERGIA Y MEDIO AMBIENTE SA 3.75 %
TRINA SOLAR LTD-SPON ADR 3.35 %
EVERGREEN SOLAR INC 3.31 %
CENTROTHERM PHOTOVOLTAICS 3.30 %
ENERGY CONVERSION DEVICES 3.13 %
ERSOL SOLAR ENERGY AG 3.11 %
SOLARFUN POWER HOLDINGS CO 3.08 %
CANADIAN SOLAR INC 2.92 %
SOLON AG FUER SOLARTECHNIK 2.84 %
MEYER BURGER TECHNOLOGY AG 2.55 %
CONERGY AG 2.41 %
ROTH & RAU AG 2.14 %
MANZ AUTOMATION AG 2.07 %
CHINA SUNERGY CO LTD 2.02 %
EMCORE CORP 1.70 %
EURO 0.00 %
SWISS FRANC 0.00 %

Risks associated with solar energy
Oil prices and government intervention play large roles in the fortunes of solar energy companies. When oil prices fall, interest in solar energy is likely to drop off, as even at current high prices, petroleum-based energy is less expensive than solar.

However, a positive political environment for solar energy means favorable policies and subsidies are in place in a number of countries. Unfortunately, those government subsidies can fade with the vagaries of politics, and that could leave solar in the dark.

In addition, many solar stocks have already made huge gains in recent years. The question remains whether these companies can sustain growth long enough to justify their pricey valuations.

Compliments TheStreets, Fool