Could now finally be the time for rate cuts to arrive? The Fed’s “will they/won’t they” back-and-forth on rate cuts and inflation has dominated finance media headlines for almost two years. That discourse has seen plenty of milestones, but now it really seems that rate cuts could be arriving as soon as September. One area that may benefit on the rebound could be clean energy, with a clean energy ETF like the ALPS Clean Energy ETF (ACES) an intriguing option.
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Clean energy investments benefited significantly from Federal spending over the last few years. The pace and amount of rate hikes, however, took a bite out of smaller clean energy firms relying on borrowing. A rate cut or even two before the end of the year, however, could reignite the space as it continues to benefit from that long-term public investment.
Clean Energy ETF ACES and Rate Cuts
ACES presents one option therein. It tracks the CIBC Atlas Clean Energy Index for a 55 basis point fee. The ETF tracks an index of U.S. and Canada firms in clean energy. Specifically, it looks for firms involved in an increasingly sustainable energy sector like battery technology, smart grids, solar, wind, and other renewable energy sources.
The clean energy ETF has returned 3.2% since inception and could also help a portfolio meet a client’s ESG goals, for example. Perhaps most intriguing, however, is the ETF’s recent tech chart action. Its price rose above both its 50- and 200-day simple moving averages in the last week. Its current price, $32.16, sits above the pair of metrics, suggesting some notable momentum after a recent downturn.
ACES, a clean energy ETF, has recently sent a technical buy signal.
Taken together, ACES may offer a more specific way to play rate cuts than simply adding another broad growth index. For those looking for additional exposure to the global energy transition, the strategy may appeal.
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