The involvement of short-sellers in TAN and the ETF’s holdings is not new. TAN’s holdings are often among the most-shorted names on Wall Street and while getting involved with an ETF that is more than 33% below its 52-week high, there is at least one potential advantage of TAN’s constituents seeing elevated short interest: A potentially impressive yield.
“But over the past few years, the ETF has beaten the MAC Global Solar Energy Index by a median of 3.6 percentage points a year,” reports Ari Weinberg for the Wall Street Journal. “That’s because like many funds, Guggenheim Solar, lends some of its holdings to other investors, often short sellers looking to bet that prices will fall. The fund collects a fee, which can balloon when demand is high.”
Securities lending has, at times, benefited TAN in another way: Juicing the dividend yield on an ETF tracking an industry not known for being home to many dividend stocks. At one point in August 2013, based on its 2012 distribution, TAN was sporting a dividend yield of 5.3%. [Solar ETF’s Holdings See Surge in Short Interest]
Guggenheim Solar ETF
