The King of Clean Energy Indices

January 22nd at 8:15am by Tom Lydon

What a difference Elon Musk makes. Not just to shareholders of story stocks SolarCity (NasdaqGM: SCTY) and Tesla (NasdaqGM: TSLA), but to indices that include those stocks and exchange traded funds that track those indices. Such is life for the NASDAQ Clean Edge Green Energy Index.

“Although 2013 may have been a good year for equities, it was a great year for ‘green’ energy equity indexes,” according to a report by NASDAQ OMX Global Indexes.  “The NASDAQ Clean Edge Green Energy Index, the underlying index for the First Trust NASDAQ Clean Edge Green Energy Index Fund (NasdaqGS: QCLN), was up +88.72%, outperforming nearly all other competing specialty sector indexes. The WinderHill Clean Energy Index was up just +57.90% and the Ardour Global Index Extra Liquid was up +69.41%.”

QXLN  ranked as one 2013 top-performing ETFs of any stripe due in large part to its reputation as on the “Elon Musk ETFs.” [This is the Elon Musk ETF]

QCLN still fits the bill on that front as Tesla is the ETF’s largest holding with a weight of 9.6% and SolarCity is the fund’s sixth-largest holding at 5.17%. Tesla and SolarCity played pivotal roles in helping the NASDAQ Clean Edge Green Energy Index outpace rival clean energy indices over the past 12 months as the chart below illustrates.

 

Chart Courtesy: NASDAQ OMX Global Indexes

The index’s topping of its rivals in not a new phenomenon. As the report by David Krein, Managing Director of Global Information Services of NASDAQ OMX, notes, the NASDAQ Clean Edge Green Energy Index has come out on top over the past three- and five-year time horizons. Said another way, the index and QCLN have performing well since long before SolarCity and Tesla went public.

Tracking error for QCLN relative to its underlying index has been tolerable over lengthy time horizons. QCLN has lagged the index by just three basis points over the three years ending Dec. 31, 2013 and 26 basis points over that five-year period.

 

Chart Courtesy:  NASDAQ OMX Global Indexes

QCLN, which has almost $120 million in assets under management, is up nearly 6% to start 2014. Other top-10 holdings in the ETF include Cree (NasdaqGM: CREE) and First Solar (NasdaqGM: FSLR).

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.

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