Over the past five days, one clean energy ETF has seen its share price rise by more than 9%.
In the wake of the US presidential election, iShares Global Clean Energy ETF (LSE:INRG) has seen its share price surge. Over the past five days, as of 9 November, the share price of the ETF has risen by just over 9%.
The ETF is part of interactive investor’s ACE 40 selection of ethical and sustainable funds. The rally in the ETF’s share price is primarily the result of Joe Biden’s victory in the US presidential election. Biden is seen as likely to provide large subsidies to the renewable energy sector. In particular, the new president is expected to bring the US back into the Paris Climate Agreement and agree to achieving net-zero carbon emissions by 2050.
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That will require a lot of money being funnelled into green energy initiatives and is potentially a major tailwind for clean energy and other green assets. Although the ETF has a global focus, tracking the S&P Global Clean Energy index, it has a weighting to the US of around 30%.
The subsequent uplift in iShares Global Clean Energy ETF and other ESG assets is one of the few election trades that has worked out. Prior to the election, many investors were banking on a Biden presidential win combined with a Democratic victory in the Senate – the so-called blue wave. This was supposed to result in Congress passing a large stimulus bill, providing an uplift to cyclical and value stocks. However, with the Senate likely to stay in Republican hands, a large stimulus bill is unlikely. Instead, tech stocks have rallied.
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The recent performance of iShares Global Clean Energy ETF follows a strong year for the fund. As Douglas Chadwick, of Saltydog Investor, recently noted on interactive investor, over the past six months the fund’s share price has almost doubled. According to FE Analytics, the ETF has returned just over 83% year-to-date, total return in sterling terms. Over the past five years, the ETF has returned 172.8%.
The ETF has an ongoing charge of 0.65%.
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Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.