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.
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.