Market Vectors has announced that the NYSE Arca-listed Market Vectors Solar Energy ETF (KWT) is to adopt an in-house index.
The Market Vectors Solar Energy ETF is to drop its existing Ardour benchmark in favour of an in-house index.
The fund currently tracks the Ardour Solar Energy Index, an index designed by alternative energy specialists Ardour Capital Investments, but will switch to Market Vectors’ own-brand Market Vectors Global Solar Energy Index in March.
The Market Vectors Global Solar Energy Index is a pure-play index measuring the performance of the largest and most liquid companies in the global solar energy sector.
The index contains only companies that generate at least 50% of their revenues from photovoltaic and solar power and related equipment, technologies, materials or services. Interestingly, the Ardour index demands a minimum of 66% of revenues from the target sector, suggesting that pure solar exposure may actually decline as a result of this index change.
The top five constituents are Gcl-Poly Energy Holdings with a weight of 9.22%, Wacker Chemie with 7.06%, First Solar with 6.48%, Memc Electronic Materials with 5.99%, and Sumco with 5.66%. At the country level, the US and Taiwan dominate with a combined 50.11% weight.
The index is weighted by float-adjusted market capitalisation and covers at least 90% of the free-float market capitalisation of the investable universe with at minimum of 25 constituents (the index currently has 34 constituents).
The index announcement comes at a time when solar ETFs are among the market’s hottest performers. So far this year the Market Vectors Solar Energy ETF has gained over 21%. Its biggest rival, the Guggenheim Solar ETF (TAN), which tracks the MAC Global Solar Energy Index, has also posted a strong performance, increasing 19% since the start of the year. These returns compare to a rise of just 3% for the S&P 500.
The Market Vectors Global Solar Energy Index has lagged this performance a little, though has still added an impressive 18% year to date.
UK and European investors looking to get exposure to the solar sector via a locally listed ETF (the Market Vectors and Guggenheim ETFs are listed on the NYSE Arca) would need to consider a broader clean energy ETF.
Examples include the PowerShares Global Clean Energy ETF (PSBW), the Credit Suisse Global Alternative Energy ETF (CSAE), the iShares S&P Global Clean Energy ETF (INRG), the ETFX DAXglobal Alternative Energy ETF (ALTE), the Amundi Green Tech Living Planet ETF (AWWF), and the EasyETF FTSE Environmental Opportunities 100 (UET).