Market Overview

This Clean Energy ETF Is Cleaning Up

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This Clean Energy ETF Is Cleaning Up

The SPDR S&P Kensho Clean Power ETF (NYSE: CNRG) is one of the newer kids on the alternative energy exchange traded funds block, but a potent member of that group nonetheless.

What Happened

CNRG debuted last October and recently changed its name and its ticker. Regardless of its name or call sign, CNRG, like so many alternative energy ETFs, is soaring. Since coming to market CNRG is up 30%, easily outpacing traditional fossil fuels funds and some rival clean energy ETFs over that period.

CNRG, which tracks the S&P Kensho Clean Power Index, is delivering these stellar performances in almost anonymous fashion as the fund has just $6.77 million in assets under management.

Why It's Important

While CNRG toils in anonymity, that overlooked status could be shed as the weight of the traditional energy sector declines in the S&P 500 and as a wave of newer, younger investors embrace environmentally friendly investment themes. Additionally, CNRG employs artificial intelligence in its securities screening process, indicating that the fund is a departure from the old guard of clean energy ETFs.

CNRG “seeks to track an index utilizing artificial intelligence and a quantitative weighting methodology to capture companies whose products and services are driving innovation behind the clean energy sector, which includes the areas of solar, wind, geothermal, and hydroelectric power,” according to State Street.

CNRG ascent comes against the backdrop of declining alternative energy production costs, which are prompting more utilities to turn to clean energy sources. The fund features exposure to over a dozen industries and its 44 holdings include familiar names such as SunPower (NASDAQ: SPWR) and Tesla Inc. (NASDAQ: TSLA).

What's Next

Solar, a theme that CNRG has ample leverage to, paints a bright picture for CNRG going forward.

“The cost to install solar has dropped by more than 70% over the last decade, leading the industry to expand into new markets and deploy thousands of systems nationwide,” according to the Solar Energy Industries Association. “Prices as of Q1 2019 are at their lowest levels in history across all market segments. An average-sized residential system has dropped from a pre-incentive price of $40,000 in 2010 to roughly $18,000 today, while recent utility-scale prices range from $28/MWh - $45/MWh, competitive with all other forms of generation.”

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