Blue Horizon ETF Targets New Energy Economy

A new ETF focuses on the entire alternative energy ecosystem.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Today, Blue Horizon Capital rolled out an ETF that covers the entire alternative energy economy. The Blue Horizon BNE ETF (BNE) targets companies in five segments: electric vehicles and other new energy consuming applications; energy storage; performance materials; energy distribution; and energy generation, according to the press release.

BNE comes with an expense ratio of 0.87% and lists on the NYSE Arca.

While there are many alternative energy ETF products available, BNE is unique in that it covers the entire ecosystem related to the “new energy” economy, from generation to the manufactured products that reach end users.

“Many investors and advisors already understand the disruptive power of the New Energy Economy, but for too long have had to invest ‘on the bookends,’ focused on how energy is being produced, such as through solar technology, and how energy is being used, such as in electric cars,” said Govind Arora, partner and president of Blue Horizon.

“That approach misses much of the innovation taking place in storage, distribution and efficiency of final energy delivery, which will drive the growth of the New Energy Economy for decades to come. BNE’s holistic approach gives investors a powerful tool for accessing the entire New Energy Economy,” he added.

Blue Horizon Partner and Head of Thematic Strategy John Mitchell notes that a company like Tesla, which is extremely popular with investors, would not be able to put cars on the road and in end user hands if it was not for the companies providing the technologies behind the infrastructure.

Both Arora and Mitchell hail from the industry side of the equation, having held roles in Albemarle Corp.’s lithium and advanced materials unit. They describe the new energy economy as being at the beginning of a “multi-decade growth story.”

Methodology

The index holds 100 securities from five segments and 25 subsegments, and it equal weights them on a semiannual rebalancing schedule. Arora compares the early stages of the new energy economy to the early days of the internet economy, in that investors do not yet know who the “winners” will be. The equal-weighting keeps large companies from overshadowing smaller up and comers.

Eligible companies must meet size and liquidity minimum thresholds, and each is scored on revenue, market share, growth and technology leadership relative to peers. The highest-scoring companies are selected for inclusion, with each of the segments limited to no more than 30 holdings.

Top holdings in the index include JinkoSolar Holding, Lithium Americas Corp and Yadea Group, while the U.S. is weighted at 48% of the portfolio, with top countries in the portfolio beyond the U.S. including China, Japan and South Korea.

Contact Heather Bell at [email protected]

 

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.