First Trust has expanded its lineup of thematic ETFs in Europe with the launch of two new strategies providing exposure to clean energy and internet-related companies.

First Trust has introduced new clean energy and internet strategies.

The funds – the First Trust Nasdaq Clean Edge Green Energy UCITS ETF and First Trust Dow Jones International Internet UCITS ETF – have been brought to market through the repurposing of two subscale smart beta products.

Clean energy

The First Trust Nasdaq Clean Edge Green Energy UCITS ETF has emerged out of what was the First Trust Small Cap Core AlphaDEX UCITS ETF. It tracks the Nasdaq Clean Edge Green Energy Index.

The index is designed to reflect the performance of manufacturers, developers, distributors, and installers of clean-energy technologies, as classified by Clean Edge. Clean Edge is a US-based developer of thematic stock indices devoted to the clean energy economy.

The index selects its constituents from a universe of US-listed securities, including American Depository Receipts, with market capitalizations above $150 million.

Clean Edge screens for companies that derive at least 50% of their revenue from four clean energy sub-sectors: Advanced Materials (firms producing silicon, lithium, bio-based, and other materials that enable clean energy and low carbon technologies); Energy Intelligence (firms involved in conservation and energy efficiency through smart meters, energy management systems, smart grids, superconductors, and power controls); Energy Storage & Conversion (developers of advanced batteries, power conversion equipment, electric vehicles, hybrid trains, and green fuel cells); and Renewable Electricity Generation (firms creating power through solar, wind, geothermal, and water).

Constituents are weighted by float-adjusted market capitalization subject to a cap of 8% on each of the five largest positions and a cap of 4% on any other stock. The index is reconstituted semi-annually and rebalanced quarterly. As of 5 February, companies from the US accounted for three-quarters (75.8%) of the index with the next-largest country weights being China (9.4%), Canada (8.1%), and Israel (4.6%).

Stocks from the information technology and industrials sectors dominate the index with weights of 38.2% and 23.4%, respectively, while consumer discretionary (17.6%) and utilities (11.0%) also play significant roles. Notable holdings currently include Tesla (8.8%), Plug Power (7.3%), Enphase Energy (7.0%), NIO (6.6%), and Albemarle (4.8%).

The fund comes with an expense ratio of 0.60% and is available to trade on London Stock Exchange in US dollars (QCLU LN) and pound sterling (QCLN LN). Income is capitalized.

A US-domiciled version of the fund, the First Trust Nasdaq Clean Edge Green Energy Index Fund (QCLN US), is home to more than $3 billion in assets.

International internet

The First Trust Dow Jones International Internet UCITS ETF, meanwhile, has been fashioned out of what as the First Trust Switzerland AlphaDEX UCITS ETF. It tracks the Dow Jones International Internet Index which selects its constituents from a universe of global developed market stocks (excluding the US) and emerging market stocks (excluding Chinese A-Shares). Eligible firms must have market capitalizations greater than $1bn.

The methodology selects the largest 40 pure-play internet companies, defined as those with greater than 50% relevant revenue exposure, from two different sub-themes: 20 from Internet Commerce and 20 from Internet Service. Exposure to the sub-themes is determined by a list of 17 related GICS industry sub-groups.

Constituents are weighted by float-adjusted market capitalization subject to a single security cap of 10%. The index is reconstituted and rebalanced on a quarterly basis. China-listed stocks currently account for about half (48.0%) of the index with the next largest country weights being the Netherlands (7.5%), Canada (7.4%), South Africa (6.2%), and South Korea (5.1%).

Over three-quarters of the index is dedicated to stocks from the consumer discretionary (45.7%) and communication services (34.3%) sectors, with the remaining exposure coming from information technology (17.3%) and health care (2.7%). Notable holdings currently include Meituan (11.7%), Tencent Holdings (10.1%), Alibaba (8.3%), Shopify (8.1%), Naspers (5.9%), Sea (5.2%), JD.com (4.9%), and Baidu (4.2%).

The fund comes with an expense ratio of 0.55% and is available to trade on LSE in US dollars (FDNU LN) and pound sterling (FDN LN). Income is capitalized.

A US-domiciled version of the fund, the First Trust Dow Jones International Internet ETF (FDNI US), houses around $140m in assets.