On Thursday, VanEck released its new VanEck Green Infrastructure ETF (NASDAQ: RNEW) amid growing interest in sustainable infrastructure investment tied to the Inflation Reduction Act signed into law earlier this year.
The ETF seeks to ride the $130 billion in government green infrastructure initiatives from the IRA towards grants, loans, tax credits, and existing green State government commitments.
RNEW tracks the Indxx US Green Infrastructure – MCAP Weighted Index, which includes a collection of firms across key themes and sub-themes that aim to impact the environment through green energy infrastructure, ranging from electric vehicle and lithium-ion battery companies to solar panel and wind turbine manufacturers.
“The state of the U.S.’s infrastructure is in need of renewal and an upgrade to support a growing population and the goals of environmental sustainability and climate resiliency,” said Michael Cohick, Director of Product Management with VanEck, in a news release.
“Fortunately, government initiatives and private sector innovations are providing potential opportunities for investors to participate in this long-term trend. We’re very pleased to be launching RNEW, with its ability to effectively target sustainable infrastructure companies broadly,” Cohick added.
Firm eligibility requirements for the index include generating 50% of revenues from green infrastructure activities, being domiciled in the United States, and a minimum market cap of $500m. Specific equities are capped at a 5% weight, while sub-themes top off at 30%. The ETF charges a 45 basis point management fee and is managed by Peter H. Liao.
While most investor focus has targeted the “traditional” infrastructure sectors like transportation, VanEck sees opportunities in the innovations around green initiatives in other critical parts of U.S. infrastructure.
“Up to this point, the majority of investor focus around green infrastructure has been in what we would term the ‘traditional’ sectors, such as transportation and industry,” Cohick said. “But there are numerous innovations taking place around green initiatives in power storage, construction, waste management, and more that will drive the next iteration and evolution of U.S. infrastructure.”
The new ETF will join a roster of sustainable equity and fixed income strategies at VanEck, including the VanEck Low Carbon Energy ETF (SMOG), the VanEck Green Bond ETF (GRNB), the VanEck HIP Sustainable Muni ETF (SMI), the VanEck Green Metals ETF (GMET), the VanEck Future of Food ETF (YUMY) and the actively managed VanEck Sustainability Fund (ENVYX).
“Government spending to support clean energy initiatives could be a catalyst for green infrastructure investments,” said Todd Rosenbluth, head of research at VettaFi. “It is great to see Van Eck expand its product lineup to support advisor efforts to focus on this compelling theme.”
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