Investors piled into BlackRock’s clean energy ETF last week as the chances of a ‘blue wave’ became almost a formality following an upset win for Democratic senator Raphael Warnock in Georgia.
According to data from Ultumus, the iShares Global Clean Energy UCITS ETF (INRG) saw $491m inflows in the week to 8 January, the third highest across all European-listed ETFs.
With a Democrat presidency and control of both US Houses, the door has been opened for a raft of pro-renewables policies, such as Joe Biden’s pledges to commit $2trn to climate-related investments, push towards a carbon-neutral power sector by 2025, and a net-zero economy by 2050.
These policies will naturally require an expansion of clean energy utilities, according to Rob Powell, director of product strategy for thematic investing at BlackRock.
“[It] is the clean energy equipment makers that have led INRG’s stellar performance, driven by expectations of increased long-term demand and looking past the delays in renewable capacity additions in 2020,” Powell added.
As a result, the positive news has sent clean energy stocks soaring with INRG already delivering 14.8% returns so far this year, as at 14 January.
Indeed, with more than half of the INRG basket being made up of utilities, and 42.4% of its portfolio being US-based, the ETF is well-positioned to benefit from a Biden fiscal push towards carbon neutrality.
It should also be noted that president-elect Biden’s climate change ambitions will not just affect change within the US domestic market.
As BlackRock said: “The US would likely immediately rejoin the Paris Agreement and increase its emissions reduction goals. Its fiscal plans could help supercharge a globally coordinated green stimulus effort, adding to recent efforts by the European Union.”
Since US election day, INRG has returned almost 56%, and over the past 12 months, it has boasted a return of 142.4%, as at 12 January, the most across all European-listed ETFs.
These strong returns combined with the Biden-presidency tailwind drove almost $3bn inflows into INRG in 2020, the third highest in the European ETF market.