The ALPS Clean Energy ETF (ACES) increased 0.83% last week, outpacing weak equities markets on a litany of clean energy news following improved sentiment around the U.S. Inflation Reduction Act.
At the Fed’s Jackson Hole event last week, Chairman Powell stated that the Fed would keep rates higher for longer to counteract inflation, causing global markets to spiral. Clean energy names fared better as inflation and supply chain issues have held back clean energy stocks in the face of record demand, so many clean energy management teams welcome the measures to lower inflation, ALPS wrote in a recent insight.
Lifted by renewed expectations for increases in Electric Vehicle (EV) production and lithium prices, lithium producer Livent Corp. (LTHM, 4.25% weight as of August 26), gained over 15% last week and led ACES’ EVs segment returns, according to ALPS.
Adding onto ACES EV gains, Volta Inc. (VLTA, 0.20% weight as of August 26) increased 5.58% last week after announcing a partnership with the city of Hoboken, New Jersey, to install 25 public EV charging stations with digital advertising at the stations. Rounding out the top EV gainers, lithium-ion battery recycler Li-Cycle Holdings Corp. (LICY, 0.67% weight as of August 26) gained 4.00% on the CEO’s CNBC interview where he cited the expanding opportunity for lithium-ion EV batteries in Europe, as well as its upcoming U.S.-based facility that will extract rare earth metals from recycled EV products, ALPS wrote.
The U.S. Inflation Reduction Act marks a major step forward in the energy transition away from fossil fuels and places the U.S. at the forefront of clean energy initiatives that will unequivocally lead other major nations to put in place more specific initiatives, according to ALPS.
ACES’ pure-play methodology offers exposure to only U.S. and Canadian companies across seven distinct clean energy segments that will all directly benefit from the tax credits included in the bill, according to ALPS.
Other ETFs offering exposure to the clean energy industry include the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN), the SPDR S&P Kensho Clean Power ETF (CNRG), and the iShares Global Clean Energy ETF (ICLN).
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