VanEck has launched a new ETF in the US providing exposure to US companies involved in the development of sustainable infrastructure including firms producing or distributing green energy.
The Inflation Reduction Act is providing $130 billion in funds to incentivize green infrastructure initiatives.
The VanEck Green Infrastructure ETF (RNEW US) has been listed on Nasdaq with an expense ratio of 0.45%.
VanEck points to the significant commitments and investments being made by both Federal and State governments in the US with regard to sustainable infrastructure.
The Inflation Reduction Act alone provides $130 billion in funds to incentivize initiatives such as tax credits for solar and electric vehicle purchases, grants and loans for sustainable energy capital expenditures, and both grants and tax credits for a wide array of decarbonization projects.
Michael Cohick, Director of Product Management at VanEck, commented: “The state of the US’s infrastructure is in need of renewal and an upgrade in order to support a growing population and the goals of environmental sustainability and climate resiliency. In fact, the American Society of Civil Engineers gave the US a C- grade for its overall infrastructure in 2021 with sub-sectors including energy, hazardous waste, and transit all earning D+ grades or worse.
“Fortunately, government initiatives and private sector innovations are providing potential opportunities for investors to participate in this long-term trend. We’re very pleased to be launching RNEW with its ability to effectively target sustainable infrastructure companies broadly.
Methodology
The fund is linked to the Indxx US Green Infrastructure – MCAP Weighted Index which selects its constituents from a universe of US-domiciled companies with market capitalizations greater than $500 million and average daily trading volumes above $2m.
To be eligible for inclusion, companies must generate at least 50% of their revenues from green infrastructure activities across a handful of key sub-themes: pollution control, waste management, green constructions, green energy & fuel, green transportation, and green infrastructure equipment.
The index includes the 50 largest eligible firms. Constituents are weighted by float-adjusted market capitalization subject to a cap of 30% on any sub-theme and 5% on any company.
As of 20 October, nearly two-fifths (39.5%) of the index was allocated to industrial stocks with the next-largest sector exposures being utilities (16.0%), energy (15.4%), information technology (12.9%), and consumer discretionary (11.8%).
Notable positions included Cheniere Energy (6.2%), Enphase Energy (6.0%), First Solar (5.8%), Quanta Services (5.3%), Waste Management (5.2%), Republic Services (5.1%), Tesla (4.7%), and New Fortress Energy (4.5%).
The fund will compete with two existing ETFs targeting sustainable infrastructure investment themes. The JPMorgan Sustainable Infrastructure ETF (BLLD US) and First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID) have expense ratios of 0.49% and 0.63%, respectively.