Rare are bipartisan issues these days, but renewable energy may be getting there and that could be an added bonus for already high-flying exchange traded funds, such as the ALPS Clean Energy ETF (ACES).
ACES follows the CIBC Atlas Clean Energy Index. That benchmark is comprised of U.S.- and Canada-based companies that primarily operate in the clean energy sector. Constituents are companies focused on renewables and other clean technologies that enable the evolution of a more sustainable energy sector.
While Democrats are often viewed as the party championing clean energy, some Republicans, including new members of Congress, are in favor of the concept, though with more modest proposals.
Representative-elect Cliff Bentz of Oregon, who will fill the seat held by retiring House Energy and Commerce Committee Chairman Greg Walden, R-Ore., “has advocated other climate solutions, including carbon capture and sequestration and the development of solar energy, according to an August 2019 story by The Dalles Chronicle,” reports S&P Global Market Intelligence.
More Support for ACES
ACES is coming off a year in which it more than doubled and was one of the best-performing non-leveraged ETFs of any variety. Much of that performance was attributable to Joe Biden winning the presidential election. However, ACES and its peers can potentially generate more upside as clean energy garners support in both parties.
“Florida voters elected a handful of new Republicans who have pledged to help coastal areas in the state prepare for the impacts of climate change, including through increased infrastructure investment. Those incoming members include Carlos Gimenez, who previously served as mayor of Miami-Dade County, and journalist Maria Elvira Salazar, both of whom defeated Democratic incumbents,” according to S&P Global.
Many of the freshman congressional Republicans oppose carbon taxes and favor private investment in renewable energy, indicating their view of the issue is less audacious than those held by their counterparts on the other side of the aisle. However, if the two parties can meet in the middle on renewable energy policy, ACES still offers plenty of potential for investors.
Other alternative energy ETFs include the First Trust Global Wind Energy ETF (FAN) and the SPDR Kensho Clean Power ETF (CNRG).
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
