Tesla’s Surge Buoys Inflows to Green Energy ETF
May 22nd 2013 at 2:02pm by Tom Lydon
Shares of electric car maker Tesla (NasdaqGS: TSLA) were up a staggering 65.1% since the start of May 1 heading into Wednesday’s trading session, but Tesla’s story stock status is not benefiting the lone auto ETF.
Or at least Tesla is not benefiting that ETF much. The First Trust NASDAQ Global Auto Index Fund (NasdaqGM: CARZ) only has a 1.88% allocation to Elon Musk’s company, making it just the ETF’s 18th-largest holding, according to First Trust data.
Investors looking to play Tesla’s rise via ETFs need not fret because there are credible options. The most credible being the First Trust NASDAQ Clean Edge Green Energy Index Fund (NasdaqGM: QCLN). A case can be made that it is soaring solar stocks that are boosting QCLN’s fortunes. Names such as First Solar (NasdaqGS: FSLR) and SunPower (NasdaqGS: SPWR) are found among QCLN’s top holdings and that is a good thing when solar ETFs have surged over 50% in a month. [Solar ETFs Up 50% In A Month]
The reality is QCLN is “the Tesla ETF” with a 15.2% weight to the stock. Tesla’s surging market value has increased its presence in QCLN to 15.2% as of Tuesday from 13.4% on May 13. The stock outweighs the ETF’s second-largest constituent, Cree (NasdaqGS: CREE), by about 720 basis points.
Of course, shaking its status as a socially responsible, green energy play to become the Tesla ETF has been good for QCLN. Tesla’s May gains have translated to an almost 19% pop for QCLN. [Investing In Socially Responsible ETFs]
The story is not just about the returns either. QCLN turns six years old in December and for much of the ETF’s first five years of existence, it struggled to accumulate assets. However, Tesla is helping turn that around for QCLN, too. As of Tuesday, the ETF had $42.4 million in assets under management, but $6.8 million of that total arrived in just the past month, according to Index Universe data. Since May 14, QCLN has raked in almost $2.1 million in assets. Not a huge total, but a decent sum in a short amount of time for an ETF of this size.
Bottom line: When it comes to Tesla ETFs, for now, there is only one and it is QCLN. However, there is one alternative to consider for the investor that wants to worship at the altar of Elon Musk. The PowerShares WilderHill Clean Energy Portfolio (NYSEArca: PBW) not only features a 4.74% weight to Tesla, currently decent among ETFs, but the fund’s largest holding is SolarCity (NasdaqGS: SCTY), Musk’s other company.
SolarCity accounts for 4.75% of PBW’s weight. So QCLN is the TSLA ETF and PBW is the Elon Musk ETF and that probably explains why the latter is up 18% since the start of May.
First Trust NASDAQ Clean Edge Green Energy Index Fund
ETF Trends editorial team contributed to this story.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.