Which Is the Better Energy Sector ETF, the AMLP's Focus on Traditional Energy or Invesco's TAN Targeting Solar?
Key Points
The Alerian MLP ETF (AMLP) has $13.3 billion in assets under management, making it much larger than the $1.3 billion Invesco Solar ETF.
The Invesco Solar ETF exhibits significantly higher volatility with a beta of 1.41, while the Alerian MLP ETF has a more stable beta of 0.50.
The Alerian MLP ETF is more expensive with a 1.01% expense ratio compared to 0.7% for the Invesco Solar ETF.
The Alerian MLP ETF (NYSEMKT:AMLP) provides income-focused exposure to energy infrastructure with lower volatility, while the Invesco Solar ETF (NYSEMKT:TAN) offers a high-beta play on the renewable technology sector.
While both funds provide a gateway to the energy sector, they focus on fundamentally different industrial subsets and risk profiles. One fund concentrates on the physical infrastructure and cash flows of traditional energy, whereas the other tracks the rapid evolution of renewable technology. This comparison evaluates how their assets under management (AUM), costs, and historical volatility diverge for long-term investors.
Snapshot (cost & size)
| Metric | TAN | AMLP |
|---|---|---|
| Issuer | Invesco | ALPS Funds |
| Share price | $51.86 (as of 2026-08-10) | $55.05 (as of 2026-08-10) |
| Expense ratio | 0.7% | 1.01% |
| 1-yr return (as of 2026-08-10) | 41.1% | 21.6% |
| Dividend yield | None | 7.4% |
| Beta | 1.41 | 0.50 |
| AUM | $1.3 billion | $13.3 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Alerian MLP ETF carries a higher cost of ownership with a 1.01% expense ratio, which is 0.31 percentage points higher than the 0.7% charged by the Invesco Solar ETF.
Performance & risk comparison
| Metric | TAN | AMLP |
|---|---|---|
| Max drawdown (5 yr) | (74.0%) | (20.9%) |
| Growth of $1,000 over 5 years (total return) | $607 | $2,453 |
The Alerian MLP ETF normally invests at least 90% of its assets in energy infrastructure Master Limited Partnerships (MLPs) that derive cash flow from midstream activities. These entities earn the majority of their revenue from the transportation, storage, and processing of energy commodities such as natural gas and crude oil. The fund is considered non-diversified, holding a narrow portfolio of only 14 positions. Its largest positions include Sunoco LP (NYSE:SUN) at 12.65%, Energy Transfer LP (NYSE:ET) at 12.52%, and Western Midstream Partners LP (NYSE:WES) at 12.33%. It is concentrated almost entirely in energy at 98% and was launched in 2010.
In contrast, the Invesco Solar ETF tracks the MAC Global Solar Energy Index, focusing on companies that produce solar power equipment or provide solar services. The Invesco fund commits at least 90% of its capital to equity instruments like ordinary shares and American Depositary Receipts. It leans heavily into technology at 61% and utilities at 31%, with a small 4% allocation to financial services. Its largest positions include First Solar (NASDAQ:FSLR) at 11.04%, Nextpower (NASDAQ:NXT) at 10%, and Enlight Renewable Energy Ltd at 7.18%. This solar-focused fund was launched in 2008.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
Now is an exciting time to invest in the energy sector. The artificial intelligence boom has led to soaring demand for electricity to power the army of computers needed for AI. The Alerian MLP ETF (AMLP) and Invesco Solar ETF (TAN) offer distinct ways to capitalize on this trend. Which to choose depends on your investing goals.
TAN gives you exposure to the up-and-coming solar industry. Its the ETF for those who want to support renewable energy options or who believe growth in the solar industry can deliver outsized returns. TAN’s jaw-dropping 41% one-year return is proof of this potential. However, because the sector is still nascent, TAN experiences a lot of volatility, as demonstrated by its much higher beta and max drawdown.
Given its high dividend yield, AMLP is for income-oriented investors who are comfortable paying a higher expense ratio for the greater stability afforded by this fund, as illustrated by its low beta. Since it focuses on midstream energy companies, it only has 14 holdings, which limits its ability to deliver diversification. This means fund performance depends entirely on a small basket of companies.
Robert Izquierdo has positions in First Solar. The Motley Fool has positions in and recommends First Solar and Nextpower. The Motley Fool has a disclosure policy.