Drilling for a ‘Clean Power’ ETF

The energy market is facing what is popularly called a “Catch-22.”

While the worldwide desire to shift to cleaner sources of energy to preserve the standard of life that humanity has grown accustomed to has put pressure on the desire to shift away from hydrocarbons and to hydro, wind and solar power, the problem is that those green sources of energy still do not have the capacity to generate and store enough energy to fully meet the world’s needs.

Thus, natural gas is viewed by many observers as a bridge source of energy between oil and coal, whose combustion greatly damages the environment. The desire to shift to cleaner energy also has taken center stage in the conflict regarding Russia’s invasion of Ukraine, as Russian President Vladimir Putin is attempting to dissuade foreign support for the Ukrainians by throttling its natural gas shipments to the rest of the continent and the free world is trying to wean itself off Russian oil, whose purchase is helping to fuel his invasion.

Thus, all the evidence suggests that cleaner energy, in whatever form it takes, will remain an important source of energy for many years to come.

Of course, there are exchange-traded funds (ETFs) that will do well as a result of this shift to cleaner energy. One such fund is the SPDR S&P Kensho Clean Power ETF (NYSEARCA: CNRG).

This ETF’s portfolio is composed of two sub-indexes. One follows the technology that is used in renewable energy, and the other follows companies that offer goods and services that are related to renewable energy. To find these stocks, the portfolio’s managers pore through company documents and Securities and Exchange Commission (SEC) filings to find the key terms that signal inclusion in the index. Then, companies that meet the cut are sorted into “core” and “non-core” baskets, depending on whether clean energy is the central focus of the company.

The top holdings in the portfolio are First Solar, Inc. (NASDAQ: FSLR), Plug Power Inc. (NASDAQ: PLUG), Array Technologies Inc. (NASDAQ: ARRY), Enphase Energy, Inc. (NASDAQ: ENPH), SunPower Corporation (NASDAQ: SPWR), Shoals Technologies Group, Inc. (NASDAQ: SHLS) and Bloom Energy Corporation Class A (NYSE: BE).

As of Sept. 14, CNRG has been down 5.66% over the past month and up 26.02% for the past three months. It is currently up 9.52% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $365.28 million in assets under management and has an expense ratio of 0.45%.

In short, while CNRG does provide investors with access to green energy, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.