The AMPD ETF: Innovative Diversification Tool

The 2024 etf.com Awards nominee for Best New ESG ETF is the first to track a carbon neutral electricity index.

kent
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Research Lead
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Reviewed by: etf.com Staff
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Edited by: Ron Day

 

 

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. 

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.