Picking winners in the clean energy sector is a difficult thing to do.
Solar panel manufacturers, wind turbine developers, electric vehicle companies, and battery storage businesses all move in different cycles and carry very different risk profiles.
For investors who want broad exposure to the clean energy transition without the risk of backing the wrong horse, the Betashares Climate Change Innovation ETF (ASX: ERTH) offers a simple and diversified solution.
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What ERTH actually holds
That definition is broad, capturing clean energy providers, green transport companies, energy efficiency businesses, waste management innovators, sustainable food producers, and energy storage specialists.
Top holdings include Vertiv Holdings, Bloom Energy, ABB, and ASML.
Investors therefore have exposure to companies operating across the entire clean energy value chain rather than any single technology.
The fund charges a management fee of 0.65% per annum and pays distributions annually.
Why the investment case is strengthening
The macro backdrop behind ERTH has rarely been more supportive.
In its own research, Betashares has stated:
Climate technology should no longer be viewed as a discretionary or thematic allocation. The physical impacts of climate change are increasingly being felt and have material economic consequences, and the transition is increasingly underpinned by energy system economics rather than environmental policy alone.
The performance picture
ERTH had a difficult 2025, falling alongside the broader clean energy sector as higher interest rates weighed on growth-oriented and capital-intensive businesses.
That pullback has created a more attractive entry point for long-term investors.
ERTH's one-year return is approximately 24%, recovering strongly from its late 2025 lows as rate cut expectations returned to global markets and clean energy sentiment improved.
The risks worth knowing
ERTH is not a defensive investment.
The fund carries meaningful volatility, and the clean energy sector remains sensitive to interest rate movements, government policy changes, and commodity price fluctuations.
The US' rollback of several US clean energy incentives in 2025 weighed on parts of the portfolio, and investors should factor in the possibility of further policy headwinds in the United States.
Currency risk is also present, as the fund's underlying holdings are denominated in US dollars and other foreign currencies.
Foolish takeaway
The clean energy transition is a multi-decade investment theme, and ERTH gives Australian investors a diversified, low-friction way to participate in it from a single ASX trade.
For investors who believe the energy system is being permanently rewired toward cleaner sources and want broad exposure to that shift without picking individual companies, ERTH is worth serious consideration.
