Interactive Investor

Biden victory extends rally for this already top-performing ETF

9th November 2020 11:02

Tom Bailey from interactive investor


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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.

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.

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%.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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.

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