One way for investors to get exposure to the industry leaders in green technology is through the ProShares Cleantech ETF (NYSEARCA:CTEX). According to data from ProShares, the fund “invests in companies involved in developing and building the green technologies that could power the future in areas like hydro, solar, wind, and geothermal.” CTEX stock provides exposure to many types of green energy.
Profits from clean technology, according to Goldman Sachs (NYSE:GS), could yield $1 trillion to 2 trillion of funds for green infrastructure investments every year. Clean technology may also create between 15 and 20 million jobs globally.
In 2021, the business of climate change is beginning to catch up to the emotions in the climate change debate. And that makes it a good time to invest in the clean energy sector. Clean energy includes solar and wind stocks. But it also includes related sectors like electric-vehicle charging and other renewable energy sources, such as renewable natural gas (RNG).
Skating to Where the Puck Is Going
An often overused and misused cliché is “skating to where the puck is moving.” However, in this case, I think it’s an apt expression. For at least the past 20 years, the world has been racing to develop clean-energy solutions. But that didn’t quench the need for fossil fuels.
Even the most fervent climate change advocates knew that transitioning away from fossil fuels was never going to be like flipping a light switch. At times, companies had to move forward while still waiting for the technology that they needed to be developed. It has been a slow transition.
In the last decade, world governments have been forcing the issue. For example, according to a BloombergNEF forecast, worldwide emissions must decline by 30% from 2019 to 2030 to meet the Paris Climate Accord Agreement’s goal of net-zero energy emissions by 2050.
Switching to electric vehicles alone won’t enable the world to meet that target. And that’s why the rush is on to develop renewable energy sources such as solar, wind and hydrogen.
CTEX Stock Takes an All-of-the-Above Approach
Wind and solar have dominated the shift towards clean energy. But as the recent surge of natural gas prices proves, things can change quickly in the energy sector. ETF investing is ideal for investors who do not want to have to pick the best-in-class company from each sector.
The ProShares Cleantech ETF follows the S&P Kensho Cleantech Index. According to the fund’s prospectus, companies in that index “must produce products or services related to clean energy technology, as identified by the index provider’s automated scan of recent company-issued filings.”
Within each category, the securities are given equal weight. However stocks defined as core securities are overrepresented relative to those designated as non-core securities.
U.S. companies make up over 75% of the fund. But CTEX stock also includes non-U.S. companies that are based in both developed and emerging markets. The fund is reconstituted annually and rebalanced semiannually.
Currently, the fund owns the shares of 29 companies. Not all types of clean energy are always represented. As I was writing this article , the fund was heavily weighted towards some of the largest names in the solar sector. And Tesla (NASDAQ:TSLA) is also one of the fund’s top-ten holdings.
CTEX has an annual expense ratio of 0.58% or $58 per $10,000 invested.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.
