Clean and renewable energy is taking the investing world by storm this year and issuers of exchange traded funds are meeting demand for related products. The Global X CleanTech ETF (CTEC) is one of the newest entrants to the clean energy ETF fray
CTEC, which debuted last week, follows the Indxx Global CleanTech Index and provides exposure to companies “involved in renewable energy production, energy storage, smart grid implementation, residential/commercial energy efficiency, and/or the production and provision of pollution-reducing products and solutions,” according to Global X.
Home to 38 stocks, CTEC could be a well-timed addition to the ETF world because momentum is building for renewable energy investments.
“Transitioning to renewable energy sources is a core tenet of climate change mitigation plans. These sources include on/offshore wind, solar photovoltaic (PV), hydropower, geothermal, and the use of renewable hydrogen in fuel cells,” writes Global X Analyst Andrew Little. “According to some estimates, substituting fossil-fuels like coal, oil, and natural gas with clean alternative energy sources could reduce emissions by 52% of what is needed to adequately limit warming.”
CTEC: A Smart Idea for Smart Grid Exposure
No question: the U.S. electrical grid needs a serious upgrade, and ETF investors stand to benefit as the changes take place.
Smart Grid consists of controls, computers, automation, and new technologies and equipment working together, but in this case, these technologies will work with the electrical grid to respond digitally to quickly changing electric demand brought on by increased variability due to solar and wind power. The Smart Grid represents an unprecedented opportunity to move the energy industry into a new era of reliability, availability, and efficiency that will contribute to our economic and environmental health.
“Clean technologies like those involved in renewable energy production, energy storage, smart grid implementation, energy efficiency, and pollution-reduction are essential to tackling negative environmental impacts like climate change,” notes Little. “As the economic and societal implications of these impacts continue to mount, governments and companies are ramping up carbon neutrality efforts by setting aggressive emissions targets and committing to CleanTech adoption.”
The new CTEC charges 0.50% per year, or $50 on a $10,000 investment, a fair expense ratio among thematic ETFs, including those focusing on renewable energy equities.