Investors looking to maximize the possibility of positive outcomes when it comes to clean energy equities and the related exchange traded funds may want to consider patience as a virtue. That objective becomes somewhat easier when eschewing stock picking and opting for the breadth offered by ETFs, including the SPDR Kensho Clean Power ETF (CNRG).
In fact, the long-term outlook for clean energy investing remains bright despite near-term gyrations to the contrary. CNRG follows the S&P Kensho Clean Power Index and features the depth necessary to capitalize on multiple clean energy trends. For example, CNRG member firms have exposure to multiple renewable energy concepts, including geothermal, hydrogen power, solar, and wind, confirming that the fund has the breadth necessary to capitalize on various efforts to combat climate change.
“There are significant long-term tailwinds behind the clean tech and energy transition sectors, despite the current market volatility,” said Steve Akman, director of Global Energy Investment Banking at TD Securities. “There is broad consensus that energy transition is necessary to mitigate climate change, so companies that are developing or have proven technology, and robust commercial plans will be well positioned to succeed over time.”
The research firm noted that participation at its 2022 Global Clean Technology & Energy Transition Conference earlier this year was robust, confirming there’s ample interest for clean technology among industry executives and asset allocators.
That’s one sign the long-term outlook for clean technology is attractive. Another is the willingness of venture capitalists to step up to the plate and make investments in early-stage clean energy companies. While that doesn’t directly affect CNRG member firms, it is a sign that high-level investors are believers in clean tech’s long-term trajectory.
“A significant amount of capital is often required for clean tech and energy transition investments. As many of our conference presenters acknowledged, their organizations are still in the early stages of research and development, or are establishing the commercial viability of their technology. There are an increasing number of large seed, VC, and growth stage investors looking to support innovative ideas, technologies, and management teams,” added TD Securities.
For its part, the $301.27 million CNRG holds 46 stocks, the bulk of which can be considered relatively mature companies, indicating that the fund is not highly speculative. Fifteen industry groups are represented in the fund.
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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.