With the incoming Biden Administration planning potentially massive spending on renewable energy, smart grid technologies are likely to be in focus, highlighting opportunities with exchange traded funds such as the First Trust/Clean Edge Smart Grid ETF (NasdaqGM: GRID).
The fund seeks to reflect the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index, which includes companies engaged in all components of the smart grid. Various data points confirm the long-term viability of GRID.
GRID “is made up of companies in the grid and electric energy infrastructure sector, including companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and enabling software used by the smart grid infrastructure sector,” according to First Trust research.
Good Times for GRID
GRID, which is nearly 11 years, holds 58 stocks spanning companies “involved in electric grid, electric meters and devices, networks, energy storage and management, and enabling software used by the smart grid infrastructure sector,” according to First Trust.
The technologies and companies GRID provides exposure to are cutting-edge in the energy space and are leaving traditional fossil fuels producers behind. This trend is going to be long-running, providing a lengthy runway for GRID upside.
What makes GRID increasingly relevant at a time smart grid demand is booming is that it’s one of the purest plays among ETFs addressing this fast-growing industry.
“We believe GRID captures the growing digitalization of the electric grid and the intersection of other connectivity themes with infrastructure development,” according to First Trust. “Many of the companies held by GRID harness the power of enabling technologies such as cloud computing, 5G networking, and the Internet of Things to improve electric infrastructure and more efficiently deliver power. As of 9/30/2020, the ETF had an allocation of 51.1% to the industrials sector and 26.5% to the information technology sector. As the world becomes more digitally connected, we believe companies bringing innovative solutions and new technologies to the power grid are likely to benefit.”
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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.