It's around 18 months since I purchased my first small hydrogen play - ITM Power after reading about a joint project with Orsted. I put together a few thoughts on the potential for hydrogen in this article from January 2020.
I guess many will know that almost any company involved in hydrogen had a stellar year in 2020 and I am hoping this will continue for many years to come. Last July the EU announced its plans for 40GW of renewable hydrogen by 2030. I will be interested to see what the plans are in the US under the new Biden administration but certainly hydrogen will play a big part in the transition.
Decarbonising the global economy as it moves away
from oil & gas will mean a lot of electrolysers to make the green hydrogen
and also a lot of solar and wind to provide
the energy to make it work.
 |
| Many Applications for Green Hydrogen |
That is why I have rejigged my portfolio into the companies working in these areas.
Clean hydrogen - Nel Hydrogen, McPhy, Ceres Power,
ITM Power, Ballard Power, Plug Power, Orsted and Powercell.
Solar - Enphase, Sunrun and SolarEdge.
Wind - Orsted, Vestas Wind as well as my iShares
Clean Energy ETF
The New Hydrogen Fund
Legal & General offer several thematic funds
such as clean water and clean energy. I am pleased to see that they have now expanded
the offering with a new ETF which focuses on the emerging new hydrogen economy
- an area I have been looking at for the past year or so with my green portfolio.
The L&G Hydrogen Economy ETF (HTWO) and (HTWG) launched last week and is listed on all the main European exchanges including London. It has charges of 0.49%.
This is an index fund which will track the Solactive
Hydrogen Economy Index (latest factsheet) which currently holds 28 companies from around the globe
which derive a significant proportion of revenues from hydrogen. The areas
covered include clean hydrogen producers, fuel cell technology, transport,
industrial and utility companies and others in the hydrogen supply chain.
"At LGIM, we believe in giving investors targeted, specific exposure to the full value chain of low-carbon solutions across the power production, storage and distribution energy cycles. The launch of the L&G Hydrogen Economy UCITS ETF expands on our market-leading thematic range and underscores our commitment to equipping investors with the portfolio tools they need to gain access to the key themes that will help us transition to a more sustainable world".
James Crossley, Head of UK Retail Sales at LGIM
Naturally most of my hydrogen holdings are included
but I will be adding this new fund to my green portfolio in the coming week as
a benchmark. Obviously it offers a useful collective investment vehicle for those
who want to add the emerging hydrogen focus to their portfolio.
18/2/21 Update - Shares purchased in my ISA this morning @ 707p ($9.75)
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!
Thanks for highlighting this. Will look into it.
ReplyDeleteThe index does have 28 companies, as you say, but one (FUELCELL ENERGY) seems to account for 21% of the ETF (the blurb says: "On a monthly basis, the weight of each company is assessed and, if any of them exceed 15% of the index, the weights of all companies are adjusted so that they are again equally weighted within the Index")
But, on the Solactive site it does say:
"The index composition will be reweighted according to Section 3.1 of the methodology due FUELCELL ENERGY INC. breaching the maximum weight constraint of 15%
The reweighting will be based on the close prices as of February 4, 2021 and the Adjustment will take place on February 19, 2021 (effective open February 22, 2021)"
Perhaps see how this plays out?
That's a good spot Juliet. Yes, FCEL has increased 10 fold over recent weeks...just $2.50 3 months back and now over $26. It must be difficult maintaining weighting balance when the share prices of various constituents rise or fall very quickly. Equal weighting for all holdings would be around 3% to 4%.
Deletehow do you see the current 'reset' taking place?
ReplyDeleteI assume it's locking-in profits and most will be looking for advantageous re-entry points. Also some rotation out of equities
I guess after such a strong surge these past few months, some profit taking/pull-back is inevitable. Obviously the lower prices provide an opportunity for new entrants to get on board and for longer term holders to consider a top up.
DeleteBut like everyone else, I don't have a crystal ball so will hold tight and see how this pans out over the coming weeks and months.
Thoughts anyone?
Thanks for this, really interesting. I'm just 12 months behind in setting up a green portfolio, but getting there now.
ReplyDeleteSome quick questions :
1) I can't seem to be able to buy into L&G Hydrogen fund in my Halifax Share Dealing or Hargreaves Lansdown accounts ? Where is it available ?
2) Is there any particular reason you have not included Greencoat UK Wind, though I think they are a Trust ?
3) You could also have a hydrogen strategy by investing in commodity miners e.g. Sylvania Platinum, Anglo American ? Mining the components needed to produce hydrogen ? Admittedly not then green ?
Thanks Johnl and good luck with creating your green portfolio.
Delete1. I hold my L&G Hydrogen ETF via AJ Bell Youinvest...the UK listing is traded under the HTWG ticker.
2. I have been scaling back my renewable infrastructure trusts in recent weeks and UKW was one of those sold to release funds for other areas of interest.
3. I must admit I have not looked at the commodity miners for quite some years as they do not meet my climate requirements. Many, if not all are still heavily engaged in the coal, oil and gas sectors.
Thought I'd take another look at this as, like Johnl, I couldn't find it on Hargreaves Lansdown.
ReplyDeleteThe good news is that HTWG is now available on HL.
The maybe-not-sure-yet-not-so-good news is that...well, it is like a different product.
Whilst was expecting a re-jig due to the size of FCEL in the portfolio (#1, and it accounted for 21.3%) it seems that it is now #27 and represents 2.44%.
I was initially attracted by the high placings in the top 30 by the likes of ITM, Plug, Ballard, Ceres...these are now #21, #28, #26, #22 in top 30.
The largest weightings now are the likes of Cummins, Johnson Matthey, Daimley...
The above is from the L&G Fundcentre site; if I jump over onto the Solactive Hydrogen Economy Index NTR portfolio then it is similar but a bit different; Cummins is #3 and Air Products is #1, Linde #2, for example. Plug is #10 (if I've understood the concept of 'Index Shares'). The chart appears to show that this ETF launched at its peak.
Back on the L&G site and it says: "The universe of companies out of which the Index selection is made is refreshed semi-annually in May and November"
Not quite sure what to make of it all, really. Obviously volatile stocks and so the %age of each in the ETF will fly around every 6 months.
Will put on the To Watch List.
Thanks for the update Juliet and good to hear the fund is now available via HL. Yes, the sector has seen quite a bit of volatility these past few weeks so it's probably a good move to watch and wait until things settle down. The fund seems to have been launched at a high point of many of these companies share price cycle and has so far fallen back around 10% at the current price of 630p.
DeleteI topped up my holding this past week with some of the proceeds from my Tesla sale!
Hi,
ReplyDeleteDo you have any idea if there are dividends for this etf?
Ckement
I see from the factsheet that any dividends will be re-invested.
Delete