More

    Invesco Expands Targeted Energy ETF Range

    Stockholm (NordSIP) – Renewable energy ETFs are not hard to get by these days, which is fortunate, given the pressing need for investment in this area if we are to move away from the current over-reliance on fossil fuels. More discerning investors might have noticed, however, that it is not always the full range of clean energy technologies that have benefited from this explosive growth. In a continued effort to offer investors more targeted exposure to different clean energy solutions, on 12 September, Invesco announced the launch of two new products, Invesco Wind Energy UCITS ETF and Invesco Hydrogen Economy UCITS ETF. The duo will be a complement to Invesco’s existing Solar Energy ETF.

    “As the world begins returning to normality, we should re-focus attention on decarbonisation and increasing our use of cleaner energy sources,” comments Fredrik Nilsson, Nordic Head of ETFs at Invesco. “Global capacity for wind will need to increase by more than 500% by 2050 versus pre-pandemic levels, while hydrogen could have even higher growth potential given a lack of alternative clean energy sources for these industries.”

    Invesco has selected the WilderHill indices for the new ETFs. The constituents in both indices (the WilderHill Wind Energy Index and the WilderHill Hydrogen Economy Index) are equally weighted, designed to provide more meaningful exposure across the index rather than the high concentration in the largest names that typically results from a market-cap-weighted approach.

    Each index has approximately 50 constituents with representation across the size spectrum. Companies are excluded if they have significant exposure to fossil fuels or are involved in activities that have adverse impacts on societies and ecosystems from an environmental, social and governance standpoint.

    Whereas wind energy is an established component of any renewable energy portfolio, the second of the two targeted technologies, hydrogen, is viewed as somewhat more controversial.

    “Hydrogen might be fairly new to many investors, perhaps unsurprising given it is at a much earlier stage of development compared to other clean energy technologies,” comments Dr Rob Wilder, CEO and Co-founder of WilderHill Indexes. “But hydrogen power will be critical in decarbonisation, especially for shipping and heavy industries where electrification is not really feasible. You will hear different types of hydrogen with colour codes based on the process used to provide the energy. Green hydrogen is the cleanest form as it does not use fossil fuel or produce any harmful by-products. Blue hydrogen is not as environmentally friendly but has the potential to make the most immediate impact. It uses natural gas but aims to capture and store the carbon emitted during the process.”

    Whether investors agree with Wilder’s assessment or not, Invesco has now provided them with suitable instruments to enact their convictions. “The two new Invesco ETFs, in addition to our existing Solar Energy ETF, offer investors effective targeted exposures to these powerful themes. Investors wanting broader exposure across the various clean energy technologies may wish to consider our Invesco Global Clean Energy UCITS ETF,” concludes Fredrik Nilsson.

    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

    Latest Posts

    NordSIP Insights Handbook

    What else is new?