However, like any industry, the wind energy industry does have its obstacles to overcome. Carey cited capacity as a major concern, in addition to finding enough property for large wind farms and the problem of, what he termed, "legislative risk." The wind energy industry's growth is somewhat dependent on the support it gets from local governments, whose outlooks can change depending on the political climate. For example, in the U.S., the federal production tax credit for renewable energy that benefits the wind energy industry is set to expire at the end of 2008 and its renewal is uncertain.

In terms of the fund itself, oil prices could have a significant effect on how investors interact with it.

"You could see investor interest wax and wane depending on the price of oil," Carey said, adding that the investors might find the sector to be sensitive to traditional energy commodities. He also noted that the industry was still in its early growth stages and that it could be more volatile and riskier than the average investment. However, for many investors, that might not seem like a drawback.

FAN-ing The Flames

FAN could find its way into a lot of portfolios. Investors looking to make a bet on the growing alternative energy industry might see it as a good addition to their portfolio, while others may want to use it to round out their energy sector allocation. Carey pointed out that many of the companies in the fund are not familiar names and their stocks have not seen huge run-ups. Many are located in Europe.

"It's going to be a nice vehicle to access companies that are outside the radar of most U.S. investors at this point," he said.

FAN's underlying index, the ISE Global Wind Energy Index, was developed by the International Securities Exchange and currently has 52 components. The index is weighted by modified market capitalization. Pure-play wind energy companies have a total weighting of about 66% (or two-thirds) of the index, while companies that are simply involved in the wind energy industry among their other business activities, such as Siemens and General Electric, represent about 33% (one-third) of the index's total weight.

As a result, it's a mainly pure-play index. Although it has such megacap companies as Siemens, General Electric and Royal Dutch Shell, the top five components are little known: Vestas Wind Systems (10.06%), Repower Systems (9.94%), Gamesa Corp. Tecnologica (8.82%), Hansen Transmissions International (6.50%) and Japan Wind Development Co. (4.81%).

However, it doesn't seem like FAN will be the only player in the field—PowerShares has also filed for a global wind energy ETF. FAN has the first-mover advantage though, which could be significant. Claymore launched its Claymore MAC Global Solar Energy Index ETF (NYSE Arca: TAN) just days before Van Eck launched the Market Vectors - Solar Energy ETF (AMEX: KWT), and after just a couple months of trading TAN has over $160 million in assets versus less than $25 million for KWT.

Read the prospectus for FAN here.

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