Featured Image

Clean Energy Stocks Un-phased by Powell’s Hawkish Views Last Week

  • Last week, The ALPS Clean Energy ETF (ACES) held on to gains, rising 0.83% and outpacing weak equities markets on a litany of clean energy news, following improved sentiment around the US Inflation Reduction Act. The Fed’s Jackson Hole event sent global markets in a spiral last week after Chairman Powell stated the Fed would keep rates higher for longer to counteract inflation. Inflation and supply chain issues have held back clean energy stocks in the face of record demand, so many clean energy management teams welcome the measures to lower inflation.

  • Buoyed by renewed expectations for increases in Electric Vehicle (EV) production and lithium prices, lithium producer, Livent Corp. (LTHM, 4.25% weight*), gained over 15% last week and led ACES’ EVs segment returns. Adding onto ACES EV gains, Volta Inc. (VLTA, 0.20% weight*) rose 5.58% last week after announcing a partnership with the city of Hoboken, NJ, to install 25 public EV charging stations with digital advertising at the stations. Rounding out the top EV gainers, Lithium-ion battery recycler, Li-Cycle Holdings Corp. (LICY, 0.67% weight*), gained 4.00% on the CEO’s CNBC interview where he cited the expanding opportunity for lithium-ion EV batteries in Europe, as well as its upcoming US-based facility that will extract rare-earth metals from recycled EV products.

  • ACES’ Fuel Cell/Hydrogen segment also had a few impressive movers last week, buoyed by Plug Power Inc. (PLUG, 6.82% weight*), rising 7.90% after the company inked a deal to supply Amazon Inc. (AMZN, not in ACES) with nearly 11,000 tons of green hydrogen to power its fleet of forklifts and long-haul trucks starting in 2025. Both Ballard Power Systems Inc. (BLDP, 1.53% weight*) and Hyzon Motors Inc. (HYZN, 0.12% weight*) jumped over 6% on the upbeat hydrogen news.

  • Other notable top gainers in ACES to note last week included energy storage provider, Fluence Energy Inc. (FLNC, 0.57% weight*), rebounding nearly 19% after the company inked a deal to optimize a large 350MW solar power plant in Mexico, while wind blade manufacturer, TPI Composites Inc. (TPIC, 0.56% weight*), gained 8.14% as offshore wind power continues to gain global interest.

* Weight in ACES as of 08/26/2022

“The Inflation Reduction Act represents one of the most significant pieces of economic policy in recent US history…We believe that the battery storage industry will see at least 20% growth in annual installations attached to solar and wind projects, thanks to the tax credit.”

– Fluence Energy Inc. CEO, Manuel Perez Dubuc, August 16, 2022

ACES’ US and Canadian Clean Energy Names Primed to Benefit from Renewable Policy Support
  • The International Energy Agency’s (IEA) 2050 Net-Zero emission’s scenario has spawned a global initiative by developed and developing nations that will require annual investments in wind and solar clean energy production to rise between $763 billion and $1.8 trillion between 2021 and 2030, per BloombergNEF. While those growth figures will be difficult to achieve in the near-term, increasing global policy and corporate support are inflecting higher each year to help meet those goals with drastic emission cuts expected by 2030 in many countries.

  • The US Inflation Reduction Act (IRA) marks a major step forward in the energy transition away from fossil fuels and, more importantly, places the US at the forefront of clean energy initiatives that will unequivocally lead other major nations to put in place more specific initiatives. Uniquely, ACES pure-play methodology offers exposure to only US and Canadian companies across seven distinct clean energy segments that will all directly benefit from the IRA tax credits earmarked in the graphic below.

20220829-chart


  • Importantly for ACES, the IRA stipulates that tax credits for EVs will only be received through domestic manufacturing, forcing domestic EV producers to rethink their global production and sourcing.

  • While 2021 saw only 14% of global energy consumption come from renewables, per ourworldindata.org, expectations are for renewables to account for 25-30% of global energy consumption by 2030.

Performance Summary
  1 Week YTD 1 Y 3 Y
ALPS Clean Energy ETF (ACES) 0.83% -0.50% -8.05% 114.95%
CIBC Atlas Clean Energy Index - TR 0.83% -0.43% -7.79% 117.09%
S&P 1000 Index - TR -3.11% -11.37% -6.77% 41.17%


Source: Bloomberg L.P., as of 08/26/2022

Performance data quoted represents past performance. Past performance is no guarantee of future results so that shares, when redeemed, may be worth more or less than their original cost. The investment return and principal value will fluctuate. Current performance may be higher or lower than the performance quoted. For current month-end performance call 1-866-759-5679 or visit www.alpsfunds.com. Performance includes reinvested distributions and capital gains.

For standardized performance please click here.

Top 10 Holdings
First Solar Inc 6.85%   Northland Power Inc 4.85%
Plug Power Inc 6.82%   NextEra Energy Partners LP 4.70%
Enphase Energy Inc 6.20%   Rivian Automotive Inc 4.49%
Sunrun Inc 5.25%   Brookfield Renewable Partners LP 4.44%
Tesla Inc 5.18%   Livent Corp 4.25%


As of 08/26/2022, subject to change

Important Disclosures & Definitions

An investor should consider the investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus containing this and other information, call 1-866-759-5679 or visit www.alpsfunds.com. Read the prospectus carefully before investing.

Shares are not individually redeemable. Investors buy and sell shares on a secondary market. Only market makers or “authorized participants” may trade directly with the Fund, typically in blocks of 5,000, 25,000 or 50,000 shares.

Performance data quoted represents past performance. Past performance is no guarantee of future results; current performance may be higher or lower than performance quoted.

All investments are subject to risks, including the loss of money and the possible loss of the entire principal amount invested. Additional information regarding the risks of this investment is available in the prospectus.

Obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants and general economic conditions can significantly affect companies in the clean energy sector. In addition, intense competition and legislation resulting in more strict government regulations and enforcement policies and specific expenditures for cleanup efforts can significantly affect this sector. Risks associated with hazardous materials, fluctuations in energy prices and supply and demand of alternative energy fuels, energy conservation, the success of exploration projects and tax and other government regulations can significantly affect companies in the clean energy sector. Also, supply and demand for specific products or services, the supply and demand for oil and gas, the price of oil and gas, production spending, government regulation, world events and economic conditions may affect this sector. Currently, certain valuation methods used to value companies involved in the clean energy sector, particularly those companies that have not yet traded publicly, have not been in widespread use for a significant period of time. As a result, the use of these valuation methods may serve to increase further the volatility of certain clean energy company share prices.

The Fund seeks to track the underlying index, which itself may have concentration in certain regions, economies, countries, markets, industries or sectors. Underperformance or increased risk in such concentrated areas may result in underperformance or increased risk in the Fund.

The Fund may be subject to risks relating to its investment in Canadian securities. The Canadian economy may be significantly affected by the US economy, given that the United States is Canada’s largest trading partner and foreign investor. Any negative changes in commodity markets could have a great impact on the Canadian economy. Because the Fund will invest in securities denominated in foreign currencies and the income received by the Fund will generally be in foreign currency, changes in currency exchange rates may negatively impact the Fund’s return.

Micro-cap stocks involve substantially greater risks of loss and price fluctuations because their earnings and revenues tend to be less predictable (and some companies may be experiencing significant losses), and their share prices tend to be more volatile. The shares of micro-cap companies tend to trade less frequently than those of larger, more established companies, which can adversely affect the pricing of these securities and the future ability to sell these securities.

Smaller and mid-size companies often have a more limited track record, narrower markets, less liquidity, more limited managerial and financial resources and a less diversified product offering than larger, more established companies. As a result, their performance can be more volatile, which may increase the volatility of the Fund’s portfolio.

The large capitalization companies in which the Fund invests may underperform other segments of the equity market or the equity market as a whole.

The Fund employs a “passive management” - or indexing - investment approach and seeks investment results that correspond (before fees and expenses) generally to the performance of its underlying index. Unlike many investment companies, the Fund is not “actively” managed. Therefore, it would not necessarily sell or buy a security unless that security is removed from or added to the underlying index, respectively.

CIBC Atlas Clean Energy Index (NACEX): an adjusted market cap weighted index designed to provide exposure to a diverse set of US or Canadian based companies involved in the clean energy sector including renewables and clean technology. The clean energy sector is comprised of companies that provide the products and services which enable the evolution of a more sustainable energy sector.

S&P 1000 Index: combines the S&P MidCap 400 and the S&P SmallCap 600 to form an investable benchmark for the mid- to small-cap segment of the US equity market.

One may not invest directly in an index.

ALPS Advisors, Inc. is affiliated with ALPS Portfolio Solutions Distributor, Inc.

ALPS Portfolio Solutions Distributor, Inc. is the distributor for the Fund.

Not FDIC Insured • No Bank Guarantee • May Lose Value

CLN000376 11/28/2022

Recent ETF Spotlights