Guinness Atkinson Asset Management has introduced its second ETF, an actively managed equity strategy providing exposure to companies facilitating the transition to sustainable energy.
The ETF provides exposure to a high-conviction portfolio of companies facilitating the transition to sustainable energy.
The SmartETFs Sustainable Energy II ETF (SULR US) has listed on Cboe BZX Exchange and comes with an expense ratio of 0.79%.
The ETF, which replicates an investment strategy that Guinness Atkinson has offered in mutual fund format since 2006, seeks to benefit from a triad of converging trends: growing energy demand globally, the coming peak in fossil fuel usage, and increasing cost efficiencies related to sustainable energy.
It is a strategy that looks well-placed to advantage from US President-elect Joe Biden’s clean energy plan, as well as similar propositions to prioritize the transition to renewable energy put forth by the European Union and China.
The fund seeks long-term capital appreciation by investing in companies that generate, transport, or deliver renewable energy, firms that provide equipment to these industries, as well as those developing technologies to make renewable energy more efficient and accessible.
Guinness Atkinson defines renewable energy as power that is generated through solar, wind, hydroelectric, tidal wave, geothermal, biomass, or biofuels.
The fund has a global mandate and will typically hold around 30 high-conviction equity positions, equally weighted.
Security selection is driven by fundamental analysis including quality characteristics, value metrics, and dividend history. Additionally, the asset manager evaluates how a firm’s business supports four UN Sustainable Development goals related to the development of alternative energy.
Jim Atkinson, CEO of Guinness Atkinson Asset Management, commented, “Sustainable energy is now cheaper than conventional energy. The economics are clear, and we believe the shift will be rapid. We want to provide investors with an intelligent way to invest in the energy transition. We continue to believe that an actively managed, equally weighted approach is the best way to capitalize on the investment opportunity.”
The fund goes up against some well-established index-linked sustainable energy ETFs such as the $2.5 billion iShares Global Clean Energy ETF (ICLN US), which comes with an expense ratio of 0.46%, and the North America-focussed $1.3bn Invesco WilderHill Clean Energy ETF (PBW US) and $1.1bn First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN US).
Guinness Atkinson debuted its first ETF, the SmartETFs Smart Transportation & Technology ETF (MOTO US), in November 2019. Also actively managed, the fund targets companies shaping the future of transportation. It is listed on NYSE Arca and comes with an expense ratio of 0.68%.