This blog is designed to record the investment journey of a UK based small investor. I hope to make a modest contribution to the collective wealth of investing knowledge made freely available to ordinary people. I am the author of five books [see sidebar and books tab]
I was reminded of this ETF in a comment to my
article last month My Global Index Funds Under the Spotlight. I placed it on my
list for further research. I think I may have looked at it some time back as
the ticker INRG is familiar but must have dismissed it as the performance would
have looked below par until recently.
As the name indicates, this is a fund which has a
focus on sustainable energy such as wind, hydro and solar. The ETF tracks the S&P
Clean Energy Index.
It has just 30 holdings which include some of
the big players in renewable energy from around the world.
The Case for Renewables
In just the past few years, the landscape for
renewable energy has changed quite dramatically. The big driver behind these changes
is the growing threat posed by climate change and the realisation that we need
to dramatically reduce global CO2 emissions. One of the most important steps we can take to
minimise the effects of climate change is to find reliable, affordable sources of
power that can be used by everyone around the world without generating
greenhouse gases. This means clean electricity and we need to continue to find
better ways to store and transmit this form of energy.
It's not too difficult to imagine a world in the
not too distant future when just about everything is run on renewable
electricity. Here's an interesting research article produced for Bill Gates'
In Germany, many homeowners are installing a combination
of roof-top solar with battery storage. Around 50% of all new orders for solar
PV also include storage. This makes a lot of sense because it's very
inefficient to feed this energy into the national network. (article link).
Here in the UK we have seen a big increase in wind
and solar. Just last week I noticed from MyGridGB site that wind power was
generating over 40% of our energy one windy day.
Many of the companies involved in the transition
to a more sustainable world energy transition are featured in this global ETF
and this provides an opportunity for me to tap into this sector whilst at the
same time being broadly diversified and therefore not too exposed to any single
Holdings Here are some of the larger holdings in the fund:
CEMIG - based in Brazil and engaged in electricity
production from hydro-electric and wind farms and responsible for generating
around 12% of the country's distribution.
Vestas Wind - A global leader in wind, responsible
for the design, manufacture, installation and servicing of wind turbines in 80 countries
worldwide. They are responsible for installing more wind power than any other
Siemens Gamesa - based in Spain and involved in
the manufacture of both onshore and offshore wind turbines. Their mission is to
become a global leader in the renewable energy industry driving the transition
to a sustainable world.
Pattern Energy - the largest wind power generator
in Canada and currently building the largest wind farm in USA
First Solar - a global provider of PV solar energy
solutions. They provide the latest technology solutions which are an
increasingly economically attractive alternative to fossil fuels electricity
Verbund - Austria's largest electricity supplier,
some 90% of which comes from hydropower. It also operates several wind farms in
Austria, Romania and Germany.
The fund was launched in 2007 and was hit hard by
the crash of 2008/09 losing 50% of its value within the first 18 months.
Progress since then has been slow and total return for the past 5 years is just
about break-even. However, there has been some signs of life in the past few
months and the shares are ticking up 18% since the start of this year.
INRG Shares past 3 years (click to enlarge)
I am hoping this will continue over the coming
months and years as we see the inevitable transition from fossil fuels such as
coal, oil and gas towards clean energy and a more sustainable global energy
Ongoing charges are 0.65% and the yield is around 2.5% depending upon exchange rates. My purchase price was 433p and the ETF is
held in my SIPP portfolio.
As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!