The renewable energy industry is literally cleaning house when it comes to stock market gains. The VanEck Vectors Low Carbon Energy ETF (SMOG) is up 140% the last 12 months.

SMOG seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Ardour Global IndexSM (Extra Liquid). “Low carbon energy companies” refers to companies primarily engaged in alternative energy, including renewable energy, alternative fuels, and related enabling technologies (such as advanced batteries). The fund offers:

  • One-Trade Access to Low Carbon Energy: A dynamic industry driven by growing demand for clean and alternative energy sources
  • A Pure Play with Global Scope: Global companies must derive at least 50% of total revenues from low carbon energy (i.e., alternative energy) to be added to the Index
  • Convenient Customization: Customize overall commodity exposure with targeted allocation to low carbon energy companies

 

SMOG Chart

Car Companies Driving the Gains

When looking at the fund’s top holdings, two car companies have been quite literally driving SMOG’s gains: Tesla and Nio, which together comprise almost 20% of the ETF’s holdings. With an emphasis on lowering emissions via their electrical vehicles, Tesla and Nio have been producing stellar gains the past year.

Both companies are benefiting from further tailwinds with the cost of batteries falling, which could spur further adoption of electric vehicles. As an article in the Guardian notes, “electric vehicles are close to the ‘tipping point’ of rapid mass adoption thanks to the plummeting cost of batteries, experts say.”

TSLA Chart

Sheer Dominance by the Clean Energy Sector

In the meantime, the clean energy sector continues to gain steam, which will only boost SMOG further. The S&P Global Clean Energy Index is up over 160% the last 12 months.

^SPGCNRG Chart

“Renewable energy stocks have dominated the stock market for the majority of 2020 and continue to do so now,” a Nasdaq article said. “As Joe Biden was inaugurated this week, the top renewable energy stocks kept on surging upwards.”

“This is no surprise given his plans for the clean energy sector,” the article added. “You’ve likely heard of the billions which the Biden administration has pledged to put into the development of renewable energy technology. Well, mere hours after being inaugurated, Biden has already signed executive orders to rejoin the Paris Climate Agreement. This resulted in the pullback of a major oil and gas project in Alaska. In turn, this reduces the amount of non-renewable energy in the U.S. but also reinforces the need for renewable energy.”

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