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Share Watch – 15 March 2021

Share Watch

Last week saw the debut of the BetaShares Climate Change Innovation ETF (ASX:ERTH).

ERTH is one of the few ASX ETFs to be focused on the fight against climate change.

It provides access to companies leading the fight such as renewable energy providers and green transportation.

BetaShares CEO Alex Vynokur said last month when announcing the launch while climate change was a threat, it was also an opportunity that his company’s ASX ETF would seek to capitalise on. “Our new fund will provide exposure to global companies leading the fight, and likely to benefit from what we believe is a long-term megatrend,” he said.

BetaShares is promising it will provide exposure to several companies which are part of the solution to climate change.

“This will include not only clean energy but electric vehicles, energy efficiency technologies, sustainable food, water efficiency and pollution control – in short, a broad range of solutions that directly enable the reduction or avoidance of carbon emissions,” Vynokur declared.

“Investors in ERTH can be confident that their investment dollars are having a positive impact, by supporting companies that are leading the fight to create a more sustainable planet.”

The fund seeks to track the Solactive Climate Change and Environmental Opportunities Index which has returned 28 per cent in six months and 52 per cent in 12 months.

What is in ERTH?

BetaShares says that to qualify companies must make at least 50 per cent of their business from “green revenue” which means activities that enable the reduction or avoidance of carbon emissions.

There are some curious choices of companies in the ETF. 15.7 per cent of its holdings are in the semiconductor space including Infineon, which is its biggest holding at 4.6 per cent of its portfolio.

Second is Trane Technologies which is an industrial company specialising in eco-friendly applications such as air conditioners, refrigeration and auxiliary power units.

ERTH’s third and fourth biggest holdings are tech stocks Zoom and Docusign which make up 4.2 per cent each.

Other notable companies include electric vehicle manufacturer Tesla with 3.7 per cent and the East Japan Railway Company which is Japan’s largest train operator.

42.9 per cent of ERTH’s companies are in the United States – more than any other country. Germany accounts for 8.2 per cent while France and Ireland make up 7.9 per cent and 7.4 per cent.

Are there any other climate change ETFs on the ASX?

Climate change focused ETFs aren’t as common on the ASX than other exchanges. Europe, for example, has over 20 according to ETF Stream – and many of them listed in the past couple of years.

But there are a handful of ETFs that offer exposure to micro trends within the broader move towards environmentally sustainable business practices. One is ETF Securities’ Battery Tech & Lithium ETF (ASX:ACDC) which has gained over 80 per cent in the last 12 months.

Another is VanEck Vectors MSCI International Sustainable Equity ETF (ASX:ESGI) which offers exposure to companies with high ESG performance – although of course environmental performance is just one factor when considering ESG.

VanEck is planning the launch of a renewable energy ETF in the coming weeks – the VanEck Vectors Global Clean Energy ETF (ASX: CLNE). It will track the S&P Global Clean Energy Index, which grew 116 per cent in the 12 months to January 2021.

Financial indicators

The VIX fear gauge down slightly since 7 March by 2.93 points to 20.69 (close to safe range).

The Dow Jones Industrial Average is up 1,304.45 points or 4.56% since 7 March to 32,778.64, the STOXX 600 up 12.54 points or 3.42% to 423.08 and the Shanghai Composite index down 78.16 points or 2.04% to 3,453.08.

Gold on 1,725.80. US 10-year Treasury Bonds rising up to 1.629 and oil down to 65.56. Cryptos Bitcoin up again by 8,904 points or 17.35% to 60,043.

ASX 200 down 35.20 points or 0.76% since 7 March to 6,766.80 today. The Aussie dollar down to 77.05US cents.

Eco Market Spot Prices

LGC $31.50

STC $38.85

ESC $29.90

VEEC $46.50

ACCU $18.50

Sources: RenewEconomy, demandmanager,  Reuters, SMH, Market Watch, Stockhead

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