Inflation Reduction Act Should Bode Well for This ETF | ETF Trends

On its surface, the Inflation Reduction Act may not seem like it would be of benefit to clean energy, but after reading the fine print, the act could actually help bolster companies that focus on reducing the world’s carbon footprint.

“More clean energy, less dirty energy, new punishments for methane leaks and billions of dollars for communities most in need of climate-related help — those are the provisions that have environmentalists celebrating what they see as a monumental step for U.S. climate action,” NBC news reported.

“Senate Democrats on Sunday passed a sweeping bill, known as the Inflation Reduction Act, that includes hundreds of billions of dollars to fight climate change,” the report added.

More subsidies for clean energy will mean more investment in technology. As such, one way to play the move is to take a look at the Global X CleanTech ETF (CTEC).

“On top of tax credits to provide incentives for electric vehicles and clean energy, the bill aims to expand renewable energy production and fund the development of technologies to remove carbon dioxide from the atmosphere,” NBC News added, which paves the way for an ETF play like CTEC.

A Clean Energy Play With High Growth Potential

At a 0.50% expense ratio, CTEC seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Indxx Global CleanTech Index. The fund invests at least 80% of its total assets, plus borrowings for investments purposes, in the securities of the index and in ADRs, GDRs based on the securities in the index.

The index is designed to provide exposure to exchange-listed companies that are positioned to benefit from the increased adoption of technologies focused on improving the efficiency of renewable energy production and/or mitigating the adverse environmental effects of resource consumption. Overall, the fund gives investors exposure to:

  • High growth potential: CTEC enables investors to access high growth potential through companies at the leading edge of a structural shift in global energy use.
  • An unconstrained approach: CTEC’s composition transcends classic sector, industry, and geographic classifications by tracking an emerging theme.
  • ETF efficiency: In a single trade, CTEC delivers access to dozens of companies with high exposure to the clean tech theme.

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