Philadelphia-based Blue Horizon Capital, a newly formed index, advisory, and research company, has introduced its debut ETF – the Blue Horizon BNE ETF (BNE US).
The fund provides exposure to the entire ‘New Energy Economy’ value chain including producers, distributors, and consumers.
The fund, which has been brought to market in partnership with white label issuer Exchange Traded Concepts, has listed on NYSE Arca and comes with an expense ratio of 0.87%.
The ETF blends thematic and ESG-focused investing by targeting the entire value chain of the so-called ‘New Energy Economy’.
Blue Horizon defines the New Energy Economy as the transformational shift from fossil fuels to clean and sustainable energy, encompassing production, storage, distribution, and consumption.
The ETF is linked to the Blue Horizon New Energy Economy 100 Index, a proprietary index designed by Blue Horizon’s leadership team of financial professionals and industry experts.
Eligible companies must have a market capitalization in excess of $200 million and a minimum average daily trading value of $1m. They can be listed globally.
Blue Horizon has created a thematic investment framework covering five New Energy Economy segments that capture the way energy is generated, delivered, and used:
‘Energy Generation’ includes companies making clean or alternative energy from solar, wind, hydrogen, fusion, fission, geothermal, and biofuels.
‘Energy Materials’ includes companies mining and refining critical elements, critical intermediates, specialty materials, performance materials, advanced material systems, and sub-systems used across the New Energy Economy.
‘Energy Storage’ includes companies developing energy storage technologies and products such as batteries, thermal units, mechanical units, and chemical units.
‘Energy Distribution’ includes companies driving advancements in the distribution of energy through microgrids, distributed energy systems, smart grids, and charging infrastructure.
‘New Energy Applications’ includes companies whose core products are being transformed by advances in the way energy is used or consumed. Such products include electric vehicles, portable consumer electronics, mobility devices, and tools.
Blue Horizon uses its proprietary analysis to assign thematic relevance scores to eligible companies based on revenue, market share, growth, and technological leadership position.
The index selects the 100 securities with the highest thematic scores. Constituents are equally weighted, and the index is reconstituted and rebalanced on a semi-annual basis.
The strategy is expected to continue benefitting from several tailwinds linked to the transition from ‘Old Energy’ to New Energy including innovation and technology advancements, cost reductions and improving efficiencies, regulatory support based on health and environmental issues, and growing demand for decentralized energy.
Based on back-tested performance, the index has indeed performed strongly with a return of 235.4% between 1 January 2019 and 28 December 2020, compared to 54.5% for the SPDR S&P 500 ETF (SPY US) over the same period.
Source: Blue Horizon Capital.
Disruptive power
Govind Arora, President of Blue Horizon Capital, commented, “Many investors and advisors already understand the disruptive power of the New Energy Economy but for too long have had to invest ‘on the bookends’, focused on how energy is being produced such as through solar technology, and how energy is being used such as in electric cars. That approach misses much of the innovation taking place in storage, distribution, and efficiency of final energy delivery which should drive the growth of the New Energy Economy for decades to come. BNE’s holistic approach gives investors a powerful tool for accessing the entire New Energy Economy.”
John Mitchell, Head of Thematic Strategy at Blue Horizon Capital, added, “Having appropriate global exposure is essential if investors are looking to capture the full depth and breadth of the New Energy Economy, since some of the most important advancements and use cases are currently to be found in Asia, Europe, and elsewhere. Diversification across and within New Energy Economy segments will be key, and with BNE, investors and advisors will have a single investment vehicle with broad and balanced exposure to the global New Energy Economy.”
Greg Levinson, Head of Investment Strategy at Blue Horizon Capital, said, “We equate the current state of the New Energy Economy with where the internet was 25 years ago. The world is on the cusp of historic changes in the ways energy is generated, delivered, and used. We can already see tangible changes in our daily lives as more electric vehicles take to the roads and charging stations and other infrastructure enhancements become more commonplace. But like the internet, this is a long-term growth story, and having a diversified, liquid, tax-efficient vehicle will be key as investors look to build their exposure to this theme. We could not be more pleased to be bringing the BNE ETF to the market.”