New Stimulus Effort Could Be Boon for Clean Energy ETF ACES

Already one of 2020’s best-performing exchange traded funds, the ALPS Clean Energy ETF (ACES) could be stimulated by the new COVID-19 relief package recently passed by Congress.

ACES follows the CIBC Atlas Clean Energy Index. That benchmark is comprised of U.S.- and Canada-based companies that primarily operate in the clean energy sector. Constituents are companies focused on renewables and other clean technologies that enable the evolution of a more sustainable energy sector.

While critics are attacking the massive amount of pork in the bill and aid to foreign countries at a time when Americans need cash, there are some benefits in the legislation for some ACES components.

“The stimulus deal that passed Congress late on Monday gave a big boost to renewable energy companies, including extending tax credits that could be worth tens of billions of dollars to the solar and wind industries,” reports Avi Salzman for Barron’s.

ACES Offers 2021 Upside

The outlook for the renewable energy industry as a whole appears promising given the way it has been currently performing relative to the other energy sources. An incoming Joe Biden administration that views clean energy favorably will also help ACES.

Stimulus cash “could give new momentum to stocks of solar installers and others that had risen before the election but had given back some of those gains more recently,” according to Barron’s. “Among the energy stocks that could gain from provisions in the bill are solar installer Sunrun (RUN) and SunPower (SPWR), solar equipment makers SolarEdge Technologies (EDGE) and First Solar (FSLR), nuclear power component maker BWX Technologies (BWXT), and industrial companies like General Electric (GE) that have shifted some of their business to renewables like wind.”

While environmental, social, and governance (ESG) investing has been in the limelight as of late, renewable energy strategies such as ACES are shining on their own merits. And of course, there’s help in the stimulus bill.

“The bill includes billions of dollars in research funding for solar, wind, hydropower, and geothermal energy. And it articulates a goal of 100% clean energy for the United States—a statement that seems remarkable given the normal rhetoric about climate change in Congress,” reports Barron’s.

Other alternative energy ETFs include the First Trust Global Wind Energy ETF (FAN) and the SPDR Kensho Clean Power ETF (CNRG).

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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.