Each week a team member from Nasdaq Global Indexes provides insight into what is happening across a variety of investment theses. From index and ETF performance, to analysis of market trends, our experts will cover what’s hot in the world of passive investment strategies.
This week, Mark Marex, CFA, discusses Nasdaq’s Clean Edge Green Energy Index (CELS) and its performance:
- Nasdaq has partnered with Clean Edge to highlight companies in the Green Energy space through its Nasdaq Clean Edge Green Energy Index (CELS). Eligibility for index inclusion is determined by a firm’s participation in one of 4 key areas: Advanced Materials, Energy Intelligence, Energy Storage & Conversion, and Renewable Electricity Generation & Renewable Fuels.
- CELS is a modified market-cap-weighted index. Tesla (TSLA) currently maintains an outsized weighting due to its recent massive gains. The next biggest players in this index include NIO (NIO), the Chinese electric vehicle manufacturer and developer of autonomous driving technology; SolarEdge (SEDG), an Israeli smart energy tech company; and Albemarle (ALB), an older, well-established US conglomerate in Chemicals which is included because of its Lithium and Clean Fuels businesses. All of these illustrate the diverse array of constituents, across different sectors as well as countries. The CELS Index encapsulates every aspect of Green Energy, from the core renewable and green energy product manufacturers, to the developers of the underlying technologies that are driving innovation in the space.
- The Nasdaq Clean Edge Energy Index has had a very strong year-to-date outperformance of broader market benchmarks, up 63.2% as of August 24th, beating even the Nasdaq-100 (NDX) by almost double – no easy feat given the exceptional performance of NDX in 2020.
- As mentioned earlier, Tesla has been the biggest contributor to returns, but is certainly not alone in its outperformance with multiple other firms in the index’s Top 20 by Weight up by 100, 200, and even 300% year-to-date.
- For investors interested in this index, the ETF tracking it is the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN). The ETF just experienced a strong rebound from a brief interruption of AUM growth in March of this year, tripling from its temporary low of $135MM in early April to $419MM as of August 24, and breaking a multiyear trend of slower growth.