Environmental services such as waste disposal might not hold the spotlight, but it’s a business that investors should keep an eye on via funds like the VanEck Vectors Environmental Services ETF (EVX). Mergers and acquisitions in the space should make for some interesting business deals that could help fuel gains for the ETF in 2021.
What’s under the hood of EVX? The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE® Arca Environmental Services IndexTM.
The fund normally invests at least 80% of its total assets in common stocks and ADRs of companies involved in the environmental services industry. The index is designed to measure the performance of widely held, highly capitalized companies engaged in business activities that may benefit from the global increase in demand for consumer waste disposal, removal and storage of industrial by-products, and the management of associated resources.
In summary, EVX gives investors:
- The Nation’s First ETF Focused on Environmental Services: A fast-growing industry driven by rapid population increases and industrialization, as well as government-mandated waste regulations
- A Comprehensive Portfolio: Includes companies involved in removal, recycling, remediation, and resource recovery of hazardous and solid waste
Environmental Services Mergers and Acquisitions
“Observers have seen a significant economic shift from the status quo across all industries,” noted a Lexology article. “Of course, this is due to the impact of the COVID-19 pandemic. One of those industries many have not considered is the waste industry.”
“The drastic countrywide shutdowns have kept employees at home,” the article continued. “As a result, offices have been silent, and work in these locations has all but ceased. That means that the waste industry has experienced a major drop in revenues. However, there is some brighter news: according to multinational independent investment bank and financial services company Raymond James. Businesses are still seeing growth, and transactions are still happening in the waste and environmental services sector.”
“Prior to COVID-19, 2020 began strong, continuing several years if momentum and activity,” the article said. “An executive at Raymond James says, ‘From an M&A standpoint, the year was active, and it remains active. We started off with a slew of very notable acquisitions, and that has continued despite COVID-19.'”
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