iShares Global Clean Energy ETF - Update

This exchange traded fund gives investors an opportunity to invest in a range of globally diverse companies involved in renewable energy.

It is an index fund and tracks the S&P Global Clean Energy Index which is made up of 30 of the worlds leading companies in the clean energy sector.

Why Clean Energy?

It is estimated that at least 50% of the world's energy will come from renewables such as solar and wind by 2050. This compares to around 7% just 6 years ago. In order to implement the Paris Agreement and limit global warming to well below 2C, governments around the world will need to invest huge amounts of capital - estimated over $3 trillion - over the coming decade and this obviously provides significant opportunities for the renewables industries.

Climate change and scarcity of resources is one of 5 megatrends identified by Blackrock which will shape the future.

The fund was added to my green portfolio in March 2019, shortly after I put my index funds under the spotlight and decided to move my portfolio away from fossil fuels. My initial purchase price was 433p and I topped up my holding during the Covid sell-off last March at 435p. The shares are held in my SIPP drawdown and also my ISA with AJ Bell Youinvest.

Fund Holdings

The ETF fund holdings include :

Plug Power (8.5%) a leading provider of fuel-cell engines and hydrogen-based solutions in the US. Some high profile customers include Amazon, BMW, IKEA, Walmart and Carrefour. The share price has grown rapidly over the past 12 months - under $4 last March to currently $39.

Enphase (5.8%) a global energy technology company and the worlds leading supplier of solar microinverters. these connect solar generation, storage and management on one intelligent platform. 

Solaredge Technologies (3.7%) another Nasdaq-listed US company providing inverter solutions across all segments of the solar PV market.

Vestas Wind (4.1%) and Orsted (4.1%) both of which I also hold as stand-alone holdings in my green portfolio.

Siemens Gamesa (4.6%) a Spanish-based renewable engineering company involved in the manufacturing of wind turbines and related servicing. Their products have been installed in over 90 countries all around the world with a current combined capacity of 100GW.

Returns

The fund had an amazing run over the past year moving from £4.00 last March and reaching a high point of £14.00 in mid February 2021 but there has been a significant pull-back over recent weeks with the share price falling back around 30%. At the current price of 985p my total return has been 127% for the year including dividends of 5.7p which gives a yield of 0.6% and subject to exchange fluctuations.

One Year Share Price INRG v RDSB
(click to enlarge)

I am hoping the set back in recent weeks is a temporary correction after such a good run but this is an emerging sector and I am prepared for some further volatility. However, over the longer term, my view is that the global renewable energy sector is likely to see continued growth as the world attempts to address the climate crisis and move to curb carbon emissions. We are weaning our economies off fossil fuels and the transition to clean energy such as wind, solar and wave power is well underway and likely to accelerate. As can be seen from the chart above, the global renewables represented by INRG has performed much better than the oil sector represented by RDSB.

I have taken a punt on a few individual companies such as Orsted, Ceres Power and Vestas Wind, Enphase and Plug Power for example but a diversified approach with the likes of this ETF probably makes more sense so I am very happy to continue holding these shares which currently make up around 10% of my green 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!

Allianz Technology Trust - 2020 Results

This trust was established in 1995 to give investors a chance to gain exposure to the technology sector. Although the trust is UK-listed, since 2007 it has been managed by a team based in San Francisco and close to Silicon Valley which is home to many of the world's biggest tech companies. The trust was added to my portfolio last September at the price of £22.50 when I decided to increase my technology weighting. 

The strategy is to identify a number of themes such as cloud computing, security, e-commerce and electric vehicles for example and hold some of the best companies within these sectors over the longer term.

Results

The trust has this week published results for the full year to Dec 2020 (link via Investegate).

It's been an excellent year with net assets increased by 76%...outperforming the benchmark Dow Jones World Technology Index by 34% and share price up 80%. By contrast, the FTSE All Share Index fell by 10% over the year. The Covid pandemic has been a severe challenge for all sections of society around the world however the technology sector has played a key role providing solutions for businesses, governments and individuals.

Some current top ten portfolio holdings include Google (6.0%), Micron Tech (3.9%), Amazon (3.8%), Samsung (3.1%), Apple (2.3%), Microsoft (3.6%) and Crowdstrike (3.0%).

The trust has a good performance record with returns of 80% in the past year, 25% last year, 41% in 2018, 42% in 2017 and just 15.8% in 2016. It is one of the top performing investment trust over both the past 5 years and also 10 years - just behind Scottish Mortgage and ahead of Monks, Biotech Growth and Linsell Train.

Commenting on the past year's results, investment manager Walter Price said:

"Global stock markets were volatile in 2020. There was a savage sell-off in March when it became clear that the virus would spread from Asia into Europe and the United States. The S&P 500, for example, dropped over 30% in a matter of days. While markets subsequently recovered, it proved to be a bifurcated market, with the winners and losers from the pandemic driving in opposite directions.

Technology remained at the top of the heap. Lockdowns forced individuals and businesses to rely on technology more than ever before. If companies didn't have the infrastructure for remote working, they needed to act quickly to ensure it was in place. They came to rely on communication tools such as Zoom and Microsoft Teams to keep in touch with clients and staff. In other words, technology kept the economic wheels turning at a time of crisis. 

This was reflected in share prices. The tech-heavy Nasdaq outpaced the S&P 500 and Dow Jones Industrial indices, rising 42.9%, compared to 16% for the S&P 500 and 6.9% for the Dow Jones Industrial Average. Our benchmark index, the Dow Jones World Technology Index, delivered 41.7%. Investors sought comfort from companies with reliable earnings and a well-established growth story".

ATT One Year Performance
(click to enlarge)

Post year-end results, the past few weeks have seen a significant correction for the technology sector. One of my former holdings, Tesla was down over 30% in a matter of weeks but luckily I sold out in early February before the drop when they decided to buy $1.5 billion of Bitcoin with reserves.

Over the past year or two I have been adjusting my portfolio and now prefer just two sectors - 75% is allocated to green/climate and the remaining 25% to technology. Holding individual tech shares can be lucrative but is also higher risk as well as more volatile. Obviously gaining exposure to a diversified basket of shares via a specialist fund or investment trust is probably the better option for the diy investor.

My Tech Portfolio March 2021
(click to enlarge)

Obviously it helps that I no longer require income from my investments as this trust is all about growth and does not pay a dividend. However, as I have pointed out in the past, it is possible to take 'income' from capital appreciation. For example, selling down shares to provide 4% 'income' from a trust which is growing at an average of over 20% each year should not be too difficult.

The shares dipped as low as £13 at the start of Covid last March and then climbed above £32 in February before the technology correction. The price is currently £28.75 so a handy 27% uplift on my purchase price last September and happy with progress so far. 

I have recently topped up my Polar Capital Technology trust and will be looking to top up this holding at some point this year.

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!