Tesla's Worth More Than an Entire Sector — That's Good for QCLN

Shares of electric vehicle (EV) giant Tesla (NASDAQ:TSLA) are up 54% over the past month, bringing the company’s market capitalization to a tidy $1.17 trillion, as of the close of U.S. markets on Friday, Nov. 5.

The big move is helping a plethora of exchange traded funds, including the First Trust NASDAQ Clean Edge Green Energy Index Fund (NasdaqGM: QCLN). QCLN follows the NASDAQ® Clean Edge® Green Energy Index. Tesla’s recent bullishness is meaningful for another reason: Alone, the company’s market value exceeds that of the entire energy sector.

Tesla Inc.’s market value has surpassed that of the entire energy sector it promises to disrupt. The electric vehicle giant headed by Elon Musk surged 43% in October, which helped propel its market capitalization to $1.2 trillion, higher than the $1.1 trillion market value of the S&P 500’s energy sector,” reports Emily Graffeo for Bloomberg.

Predictably, Tesla’s recent surge is benefiting QCLN. The First Trust ETF jumped 4% last week and is higher by 27% over the past month. Tesla is the largest component in QCLN at a weight of 10.89%. The weight of Elon Musk’s company in the ETF is up more than 240 basis points in just over two months.

“Although the energy sector, which contains 21 names, is the best-performing group of the year, its market influence pales in comparison to the mega-cap companies,” according to Bloomberg. “The top six stocks in the S&P 500 make up 25% of the index, according to data compiled by Bloomberg. And though Tesla currently has less influence on the index than the energy sector, that conceivably could change if the stock continues to climb.”

For its part, the $3.32 billion QCLN is home to 60 stocks, including Tesla, and while that’s a fairly deep bench for a renewable energy ETF, the fund is often viewed as a “Tesla ETF” owing to the fact that it has one of the largest allocations to the EV maker among all ETFs. However, QCLN is broader than meets the eye.

QCLN’s underlying index “includes companies engaged in manufacturing, development, distribution and installation of emerging clean-energy technologies including, but not limited to, solar photovoltaics, wind power, advanced batteries, fuel cells, and electric vehicles,” according to First Trust.

Tesla is one of five EV manufacturers on the QCLN roster.

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