Industry Updates

Clean energy ETFs set for further boon following Biden’s US election victory

Clean energy has been a top performing theme this year

Tom Eckett

a group of wind turbines

Investors are betting Joe Biden’s US election victory will accelerate the shift towards clean energy which has been one of the best performing industries this year.

According to data from Ultumus, investors piled $157m into the $2.7bn iShares Global Clean Energy UCITS ETF (INRG) last week as it became clear Biden was outpacing his rival US President Donald Trump in key swing states.

Along with BlackRock's ETF, there a number of ETF issuers eyeing up the space including Legal & General Investment Management (LGIM) which launched a clean energy ETF earlier today (11 November).

Last week’s inflows take INRG’s positive net flows to $1.5bn over the past year, as at 10 November, according to data from ETFLogic, as investors look to capture the shift towards a greener economy.

It is thought Biden’s victory will only serve to accelerate this shift with the President-elect pledging at least $2trn in climate-related and infrastructure investments over the next four years.

Along with promising to re-join the Paris Agreement 24 hours after entering the White House, the Biden administration is pushing towards a carbon-neutral power sector by 2035 and a net-zero economy by 2050.

“Biden’s win paves the way for a transformative shift in US climate policy,” Bram Bos, lead portfolio manager green bond at NN Investment Partners, commented: “He is committed to investing heavily in sustainable infrastructure and clean energy to tackle the existential threat of climate change.”

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INRG, which is Europe’s largest clean energy ETF, has delivered stellar performance returning 83.8% so far this year, as at 10 November.

Rob Powell, director of product strategy for thematic investing at BlackRock, said this has been driven by clean utilities being the preferred supply contracts this year amid declining power needs as a result of the coronavirus impact.

The utilities sector accounts for 54% of INRG while it also has a big weighting (41.7%) to the US where the Biden boost will be felt the most.

Powell added: “[Furthermore], 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.

“This has been reflected in the returns of all sub-segments, from the solar and wind equipment names, to alternative clean energy technology suppliers e.g. hydrogen fuel cells.”

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