VanEck has introduced Australia’s first ETF targeting firms aligned with the clean energy investment theme.
Arian Neiron, Managing Director and Head of Asia Pacific at VanEck.
The VanEck Vectors Global Clean Energy ETF (CLNE AU) has listed on the Australian Securities Exchange and comes with an expense ratio of 0.65%.
The fund offers a liquid and transparent vehicle to access to companies that are likely to benefit as the world shifts away from fossil fuels in favour of renewable technologies.
According to forecasts from the US Energy Information Administration, power generation from renewable sources are expected to provide approximately half of the world’s electricity by 2050.
The clean energy trend is also supported by favourable regulation as governments around the world adopt renewable energy policies aimed at limiting global temperature increases to 2°C above pre-industrial levels, in line with the goals of the Paris Accord.
Arian Neiron, Managing Director and Head of Asia Pacific at VanEck, said: “The demand for clean, green energy and the inevitable transition away from scarce non-renewable fuels is a global mega-trend offering huge investment potential. In an Australian first, investors will be able to invest in an ETF of global clean energy and technology companies that are positioned to benefit from this structural shift that has the potential to transform industries, society, and the world.”
Methodology
The fund is linked to the S&P Global Clean Energy Index which selects its constituents from a universe of developed and emerging market stocks with market capitalizations greater than $300 million and average daily trading volumes above $3m.
Index provider S&P Dow Jones Indices harnesses insights from TruCost to determine which firms are aligned with a range of clean energy industries including biofuel & biomass, ethanol & fuel alcohol, fuel cells, geothermal, hydro-electric, photovoltaic cells, solar, wind, among others. theme. Eligible companies include energy producers as well as those developing equipment and technology for use in the clean energy industry.
The index selects all firms that are classified as having their primary business in clean energy based on a company’s business description and its most recent reported revenue by segment. If fewer than 35 stocks have been selected, the index will also include the largest diversified multi-industry companies with significant exposure to the clean energy industry until the 35 constituent count is met.
Constituents are weighted by float-adjusted market capitalization with exposure to pure-play companies increased by a factor of two. Any individual stock is capped at 9%, and the aggregate exposure to stocks with weights greater than 4.5% is limited to 40%.
As of 9 March, stocks from the US accounted for 30.0% of the total index with the next largest country exposures being Spain (10.2%), New Zealand (8.6%), China (8.4%), and Denmark (8.0%). Power producers & energy traders (32.0%), semiconductor manufacturers (25.8%), and electrical equipment producers (22.2%) make up the greatest sector weights, while electric utility companies (16.4%) also play a significant role.
Notable positions include Plug Power (8.8%), Enphase Energy (5.1%), Verbund (5.1%), Siemens Gamesa Renewable Energy (4.7%), and Meridian Energy (4.5%).