The AMPD ETF: Innovative Diversification Tool

The CNIC ICE U.S. Carbon Neutral Power Futures Index ETF (AMPD) is a nominee in the 2024 etf.com Awards for Best New ESG ETF, which celebrates exchange-traded funds that have demonstrated outstanding performance and innovation in the field of environmental, social and governance investing. 

Innovative is a word that describes AMPD well, as it is the first ETF to track a carbon neutral electricity futures index. This means the fund invests in futures contracts for electricity but balances it with futures contracts for carbon allowances to offset the environmental impact of electricity generation. 

Timothy Cramer, CEO of CNIC Funds, says “Electricity is the most consumed commodity in the United States at a retail notional basis, but hasn’t been in any ETF, any mutual fund, any index, nothing.” That is, until CNIC created an index and modeled the AMPD fund to track it. 

Launched in May 2023, AMPD can add diversification benefits to a portfolio, as the electricity market does not have a high correlation to traditional asset classes like stocks and bonds. 

Its low relative correlation with these primary asset classes not only makes AMPD a consideration for portfolio diversification, the fund may also work as an inflation hedge. “Our electricity index and associated ETF is about 80% correlated to inflation,” adds Cramer. 

For investors concerned about environmental impact, AMPD's carbon-neutral approach can be an attractive option.