The ALPS Clean Energy ETF (ACES) has returned 7.91% over a one-week period, driven by expectations that the Russia-Ukraine war will further tighten the global oil supply and drive up commodities prices.
Crude oil briefly touched $130/ barrel earlier this week — the highest price since July 2008 — and prompted clean energy names to continue to be bid up as the alternative to pricey fossil fuels.
ACES has returned 10.36% over a one-month period and 135.30%, non-annualized, over a three-year period, according to ETF Database.
Investors in ACES are gaining exposure to the major transformation underway in the energy sector. The transition to clean energy is not just about adding more renewables – it’s about cleaner and smarter technologies transforming worldwide production and consumption of energy, according to ALPS.
This shift is disruptive to traditional sources of energy, but it also presents a compelling and long-lasting investment opportunity for the companies and industries positioned for the change, according to ALPS.
The fund’s underlying index, the CIBC Atlas Clean Energy Index, has a differentiated approach to investing in the sector.
First, by narrowing the list of constituents to companies whose primary operations are focused on clean energy, the fund offers more pure-play exposure to the sector.
Second, constituents are diversified across the sector offering exposure to the full opportunity set of this transition, and also helps to minimize the risk of investing in a single sub-segment.
Lastly, focusing on U.S. and Canadian-based companies helps to further minimize the risk of investing in a global industry by reducing risks related to foreign holdings, including currency exchange rates, financial disclosures, and regulatory and policy changes.
In addition to ACES, there are many other funds that will provide exposure to clean energy, including the SPDR S&P Kensho Clean Power ETF (CNRG), the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN), and the iShares Global Clean Energy ETF (ICLN).
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