Figure 3 lists the components that are unique to each index, along with their weights.

Figure 3

The MAC Global Solar Index has a much higher weighting of unique components: 18.34% vs. 5.91%. This is because the Ardour Solar Energy Index is more concentrated than the MAC index, with higher weights in the components shared by both indexes. For instance, while the Ardour index has 45.8% of its portfolio in its top five holdings, the MAC index has just 34.5%.

Similarly, the top component in both indexes is First Solar, a manufacturer of thin-film solar panels. But it has a 10.62% weight in the Ardour index, and just an 8.83% weight in the MAC index.

Analyzing Component Differences

What can you learn from these component lists? Let's look at the five components with the largest weight differences in the two indexes.

The single largest difference is MEMC Electronic Materials (NYSE: WFR), a U.S.-based company that manufacturers silicon wafers used both in solar devices and computers (memory, logic, microprocessors, etc.). MEMC has a 4.63% weight in the MAC index and a 0% weight in the Ardour Index, ostensibly because it does not meet the 66% revenue requirement. The company is a major and growing player in the solar industry, but the bulk of its business is tied to computers.

Next up is Solarworld AG, a German company that manufactures solar energy panels for everything from large-scale solar plants to single-family homes. It is included in both indexes, but has a 4.22% higher weight in the Ardour Index, thanks to that index's greater concentration.

The Ardour Index also has a much higher weight (4.12%) in Q-Cells AG, another German solar cell manufacturer.

CentroTherm Photovoltaics, meanwhile, merits a 3.42% weight in the MAC index and no representation in the Ardour index. The newly public German solar cell manufacturer will likely be included in the Ardour index in June, the next date for adding new components to the index.

Finally, Meyer Burger Technology AG, a Swiss company, has a 2.48% weight in the MAC index and no representation in Ardour. The company is a precision manufacturer of cutting instruments used in a variety of high-precision industries, including solar, semiconductors and optics. It's a supplier to the solar industry, but likely excluded from the Ardour index by the 66% rule.

If an investor has strong feelings about any of these companies, or the markets they are in, that could tilt the decision on which index (and therefore which ETF) is preferable.

Conclusion

Of course, the big unanswered question for now: Should you invest in the solar energy market at all?

Like all niche ETFs, solar energy shouldn't form the core of your portfolio. But these funds can make sense as a small segment of a portfolio if an investor believes the solar energy market will do well.

Which fund to choose? It depends on your perspective.

The two underlying indexes are similar, and the expense ratios are identical, so I imagine that they will trade in similar patterns. The choice really comes down to where you want to position yourself on the risk/return platform.

Do you want absolute pure-play exposure and a tilt toward growth and smaller capitalization stocks? Choose the Market Vectors KWT ETF.

Do you want a broader and (possibly) less volatile portfolio? Choose the Claymore TAN ETF.

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