A swell of encouraging data points bode well for renewable equities and the related exchange traded funds such as the First Trust NASDAQ Clean Edge Green Energy Index Fund (NasdaqGM: QCLN).
QCLN seeks investment results that correspond generally to the equity index called the NASDAQ® Clean Edge® Green Energy Index. The index is designed to track the performance of small, mid, and large capitalization clean energy companies that are publicly traded in the United States.
One of the compelling elements about QCLN is its depth. It doesn’t solely focus on solar or wind stocks as some other funds in this category do. Rather, QCLN features exposure to traditional renewable energy as well as electrical vehicle manufacturers, semiconductor makers and more. The depth is notable at a time when data confirm the growth of the alternative energy space.
“Major OEMs have consolidated market share globally with the five largest players comprising Vestas, SGRE, Goldwind, GE, and Envision supplying nearly 70% of the global installations in 2019,” according to IHS Markit. “In terms of announced turbine contracts in first half 2020, Vestas retained its lead position globally while mainland China’s ongoing installation rush resulted in local OEMs taking five of the top ten spots.”
Tailwinds in Alternative Energy
Another reasons QCLN is relevant for strategic investors today is the sheer number of tailwinds at the back of the alternative energy industry, many of which are international in nature. Wind power is one just one example of that trend.
“In 2020, global wind installations are expected to be driven by the United States and mainland China while significant growth in ordering activity has also been observed in other markets including the Nordics, Vietnam, Poland, and the United Kingdom in first half 2020,” according to IHS Markit.
Adding to the QCLN story rapid global growth in the electric vehicle industry. Important to the electric vehicle thesis is expanding market share around the world, including China, Europe, and the U.S.
As China continues to reopen its economic doors following the Covid-19 pandemic, it’s been electrical vehicles leading the way for the automotive market. This, in turn, could fuel gains for exchange-traded funds (ETFs) with EV exposure.
“The overall mainland China market in 2020 has nearly 8 million CAFC credit deficits,” according to IHS Markit research. “On the other hand, the administrative and economic incentives during recent years have driven strong electrification growth in the mainland China market; comparing to NEV requirements, the market is about to generate roughly 3.6 million NEV credits in 2020.”