Goldman Sachs Debuts Clean Energy ETF

February 10, 2022

Goldman Sachs launched its third ESG-tinted ETF, this time looking to track companies seeking to reduce the world’s carbon emissions.

The Goldman Sachs Bloomberg Clean Energy Equity ETF (GCLN) debuted on the Cboe Global Markets Thursday with an expense ratio of 0.45%. The fund is the 30th U.S.-listed ETF focusing on clean energy, according to data from FactSet.

GCLN follows a Bloomberg-developed index tracking global companies that generate renewable power or infrastructure for that industry. Firms are ranked by their market value attributed to clean energy activities on a scale from one to four.

The index is then weighted to give companies that generate half of their value from renewables a weighting of 60% of the fund’s assets, and the remaining 40% to companies generating between 10% and 49% of its revenue from renewables.

NextEra Energy and the Chinese battery maker Contemporary Amperex Technology are the top holdings in the fund, amounting to 10.31% of its weight. The index also includes generators like Duke Energy, which generates 75% of its owned capacity from carbon sources, and Dominion Energy, which sources 40% of its power from natural gas. Those firms account for less than 1% of the index’s weight each.

 

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GCLN’s index rebalances quarterly and follows 190 stocks as of launch.

Vikrum Vora, an energy infrastructure and renewables portfolio manager at Goldman, told reporters on a call Wednesday that the fund is designed to track some existing fossil fuel generators in part to gain exposure to their transition to renewable energy, and to act as a hedge against the sometimes volatile renewables sector.

The iShares Global Clean Energy ETF (ICLN), which is the largest renewable energy ETF on the market, at almost $4.7 billion in assets under management, is down nearly 39% in the past 12 months.

The politics for the industry are in flux, as President Biden’s Build Back Better proposal and its tax benefits for new renewable energy products has stalled for months. The Federal Reserve’s signals for a series of rate hikes this year also dims the outlook for financing new projects at scale.

GCLN joins the Goldman Sachs ActiveBeta Paris-Aligned US Large Cap Equity ETF (GPAL) and the Goldman Sachs Future Planet Equity ETF (GSFP) among the firm’s environmentally focused ETF offerings.

 

Contact Dan Mika at [email protected], and follow him on Twitter

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