Global X launches solar and wind ETFs
Mirae subsidiary Global X is launching solar and wind ETFs, allowing a more targeted approach for clean energy investors.
- Global X Solar ETF (RAYS)
- Global X Wind Energy ETF (WNDY)
Both charge 0.50% while tracking Solactive indexes. They buy global companies that produce solar panels and wind turbines, and those that install them, generate power from them and make related products for them like batteries.
While clean energy ETFs are a crowded market in the US (and globally) funds targeting just solar or just wind are low in number. The only other one I can see are First Trust’s (FAN) for wind and Invesco’s (TAN) for solar.
RAYS is made up heavily of Chinese solar companies, as is to be expected as that’s where the most successful solar companies are all based. While WNDY is more broadly European and Chinese.
There are few points to make about these ETFs. There’s a lot of positive stuff in here.
- RAYS launch perfectly coincides with Joe Biden’s announcement that the US will move to 50% solar power by 2050. Biden’s announcement was made the same day that Global X launched RAYS. I’m assuming the timing is a lucky coincidence.
- I’m not fully clear myself on the logic for targeting one type of clean energy (solar or wind or hydro) over another. My understanding was always solar was for daytime, wind was for night-time and the two don’t necessarily compete. So I guess the question for Global X’s salesforce is why are these ETFs better than a broad clean energy ETF like ICLN?
- Chinese solar companies like Sungrow, Longi Green, have been some of the best performing stocks in the world the past two years. (A fact which may answer the point above). They’ve rallied on the Chinese governments rooftop panel installation policies. The Tesla-esque rally hasn’t received the attention it deserves yet.
- FAN and TAN, have never recovered to the pre-2008 peaks. I have a theory that the negative experience of clean energy investors in Obama’s first term has created bad muscle memory. And this bad muscle memory has made clean energy stocks cheap. Something similar happened to semiconductor and biotech companies the decade after the dotcom bubble.
For the sake of the planet, I hope these ETFs succeed, and it is very encouraging to see all these clean energy and carbon offsetting ETFs being launched, these are more measurable and defined than the previous of ESG products that were released earlier this year.