Amid the advancement of a massive clean energy legislative package in the U.S., investors are renewing their affinity for clean energy and clean technology exchange traded funds.
This is an ETF category that’s grown rapidly in recent years and while that population boom is a positive in terms of choice, the dizzying array of options can confound investors. For investors that don’t want to focus on a single green energy concept, such as solar or wind, there is a variety of broad clean tech ETFs to consider.
A compelling choice in that group is the SPDR Kensho Clean Power ETF (CNRG). CNRG is worthy of consideration by investors because it’s one of the broader plays in this category.
“When it comes to choosing a fund to provide thematic exposure to clean energy and EVs, investors have an array of choices,” wrote Morningstar analyst Jon Hale. “A number of funds have launched in the past year or two that reference the energy transition and climate solutions as broad themes. But several more-seasoned ETFs exist that focus more specifically on renewable energy, electric vehicles, and battery technology. Even among these, there is a fair amount of variation in their investment approach.”
The $355.27 million CNRG turns four years old next month and is home to 46 stocks. On the surface, that’s not a massive number. However, the ETF is diverse in its approach to renewable energy assets and it puts the size factor on the side of investors, which is proving to be positive.
“The fund is primarily focused on small and mid-caps in the U.S. It has 38% of assets in technology, 32% in utilities, and 27% in industrials. Its three-year standard deviation is 38.6, second lowest in this group, and its three-year annualized trailing return is 36.9%, which is the best in this group,” added Hale.
In terms of specific renewable energy industries CNRG provides exposure, solar looms large and that’s relevant in the wake of the passage of the Inflation Reduction Act.
“First Solar (4.2% of assets) is the top holding here, and Enphase Energy (3.4% of assets) is number three. Number-two holding Array Technologies ARRY (3.6% of assets) makes utility-scale solar tracking technology, which makes solar arrays more efficient,” concluded Hale.
CNRG is up nearly 7% year-to-date, an impressive showing considering the carnage endured by the broader growth stock complex in 2022.
For more news, information, and strategy, visit the ESG Channel.
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.