Alt Energy ETF Debuts With Active Approach

November 12, 2020

Today, Guinness Atkinson debuted an actively managed alternative energy ETF meant to serve as a focused pure-play on the space. The SmartETFs Sustainable Energy II ETF (SULR) is actually a repackaged strategy from a successful product that Guinness Atkinson launched in a mutual fund wrapper in 2006.

SULR comes with an expense ratio of 0.79% and lists on Cboe Global Markets, the parent company of ETF.com. 

“I think the world is finally summoning the political will to deal with climate change,” Jim Atkinson, president of Guinness Atkinson Funds, said, citing changes and developments in the U.S., Europe and Japan. “I don’t like to put a lot of emphasis on the political side of this, because I think it’s the economics that drive these things. But it doesn’t hurt that there’s this political momentum.”

“We are believers in this. I don’t know how you can look ahead to the future and not conclude that sustainable energy is going to overtake conventional energy. The outlook for this sector over the long run is quite good,” Atkinson noted.

Investment Approach

SULR targets sustainable energy companies that include companies involved in generating power via any means other than fossil fuel-based energy. These alternative energy sources can include solar, wind, water-based power, geothermal, biomass or biofuels. Other eligible companies provide equipment and technologies that support these different power industries as well as those that work to support the conservation and efficient use of alternative energy, the prospectus says.  

The portfolio generally consists of about 30 positions that are equally weighted. In addition to basing decisions on fundamental analysis, company characteristics and business involvement, the managers also consider how well companies fit with four United Nations Sustainable Development Goals related to alternative energy and climate change, the document says.

Atkinson says that setting a limit on the number of holdings adds a layer of discipline to the management of the fund, noting that most people known when to buy a stock but not when they should sell.

“It puts a premium on portfolio selection across the entire portfolio,” he added.

Atkinson says his firm is in the process of transferring its focus to ETFs. It already offers the SmartETFs Smart Transportation & Technology ETF (MOTO), which launched in November of last year. 

Contact Heather Bell at [email protected]

 

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