Industry Updates

Global X raises single group holding limit for hydrogen ETF

Changes reflect the dominance of certain players in the market

Theo Andrew

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Global X is almost doubling the limit of stocks it can hold that are issued by the same company in its hydrogen ETF. 

In a shareholder notice, the firm said the Global X Hydrogen UCITS ETF (HYGN) will see the limit increase from 20% to 35% of the net asset value (NAV) of the ETF for a single group under "exceptional market conditions".

Due to the market cap weighting methodology, Global X said changes are to reflect the growing dominance of certain players in the market.

HYGN, which tracks the Solactive Global Hydrogen index, currently holds 20 companies with the top four holdings currently accounting for 55.8% of the index. Its US-listed equivalent, HYDR, currently holds 25 stocks.

The top holding, Bloom Energy Corp accounts for 16% of the ETF, followed by Plug Power (15.6%), Oslo-based Nel ASA (13.2%) and Ballard Power Systems (11%).

“It is proposed that the supplement be updated to reflect the proposal to allow this 20% limit to be raised to 35% of the NAV of the fund for a single issuer in exceptional market conditions, which may include the dominance of a particular issuer in the relevant market,” it said.

ETF of the month: Global X Hydrogen UCITS ETF

Global X said the proposed changes will take place on 10 October, subject to the approval of the Central Bank of Ireland.

Launched in February, HYGN has returned -26.2% since inception, despite enjoying a brief rally over July and August when the passing of the Inflation Reduction Act boosted clean energy stocks.

Global X did not respond for comment by the time of publication.

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