By Alps Funds
GREEN LIGHT FOR ACES LAST WEEK
- As optimism builds for a second round of U.S. fiscal stimulus due to resurgent COVID-19 cases globally, the ALPS Clean Energy ETF (ACES) soared nearly 10% last week with gains from each of its 7 pure-play clean energy segments. ACES was driven higher by double digit gains from its Solar (+17.46%), Fuel Cell (+15.40%), and Biomass/ Biofuel (+12.39%) segments.
- ACES Solar names were buoyed by positive analyst sentiment, a potential Democratic election sweep, and positive sentiment on China’s preliminary new clean energy goals, which will be finalized in Q1 2021. Four of the 6 ACES Solar names climbed over 15% on the week, led by Sunpower (SPWR, 1.43% weight) rallying over 27%.
ACCORDING TO THE EDISON ELECTRIC INSTITUTE, MORE THAN HALF OF ALL NEW ELECTRICITY GENERATION CAPACITY ADDED OVER THE PAST EIGHT YEARS IN THE U.S. HAS BEEN WIND AND SOLAR.
- Within the Fuel Cell segment, Ballard Power (BLDP, 3.86% weight*) shot up over 12% last week after it announced it will be expanding manufacturing capacity of its fuel cell components by 6x by early 2021. Plug Power (PLUG, 5.39% weight*), the other ACES Fuel Cell name, was up over 21% last week after analysts upgraded the stock on its growth opportunities within fuel cell powered forklifts and heavy duty trucks.
FULLY INTEGRATED SOLAR PANEL AND BATTERY STORAGE SYSTEM IS HERE
- At its Battery Day a few weeks ago, Tesla (TSLA, 4.49% weight*) highlighted how fast lithium-ion battery costs are declining for use in Elective Vehicles (EVs). Solar equipment suppliers, such as Enphase Energy (ENPH, 5.87% weight*), and solar equipment installers, such as SunPower and Sunrun (RUN, 6.57% weight*), are benefitting from falling battery storage costs as they all roll out fully integrated solar systems with battery storage.
- The levelized cost of electricity (LCOE) for solar PV (photovoltaic) and on/offshore wind power continues to drastically fall, enabling their further adoption as they are now cheaper than natural gas and coal.
- With battery pack prices also declining substantially, U.S. solar companies are now creating their own integrated solar storage systems, which will open up new sales channels such as peaking power plants.
- Sunpower has already developed its own integrated battery storage platform with its solar panel system, while Enphase Energy is also marketing its own storage platform. Additionally, many analysts believe the planned Sunrun-Vivint Solar (VSLR, 3.62% weight*) merger may drive the company to also develop a more highly integrated solar storage platform.
Performance data quoted represent 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 the most current month end performance data please call 844.234.5852. Performance includes reinvested distributions and capital gains.
Past performance is not indicative of future results. For standardized performance of the fund please click here.
* Weights in ACES as of 10/2/2020
Originally published by ALPS Funds
Important Disclosure & Definitions
An investor should consider the investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus which contain this and other information call 866.675.2639 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 50,000 shares.
Clean Energy Sector Risk. 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.
Concentration Risk. 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.
There are risks involved with investing in ETFs including the loss of money. Additional information regarding the risks of this investment is available in the prospectus.
Basis points – One basis point is equal to 1/100 of a percent The Fund is subject to the additional risks associated with concentrating its investments in companies in the market sector.
Diversification does not eliminate the risk of experiencing investment losses.
The fund is new and has limited operating history.
NACEX Index – The CIBC Atlas Clean Energy Index is an adjusted market cap weighted index designed to provide exposure to a diverse set of U.S. or Canadian based companies involved in the clean energy sector including renewables and clean technology.
SPK Index – The S&P 1000 combines two leading indices, the S&P MidCap 400 & the S&P SmallCap 600, to form an investable benchmark for the midsmall cap universe of the U.S. equity market. S&P 1000 measures the performance of widely available and highly liquid stocks, making the S&P 1000 the appropriate mid-small cap index for investors seeking to replicate the performance of the U.S. equity market.
SPGTCLNT Index – The S&P Global Clean Energy Index provides liquid and tradable exposure to 30 companies from around the world that are involved in clean energy related businesses. The index is comprised of a diversified mix of Clean Energy Production and Clean Energy Equipment & Technology companies.
An investor cannot invest directly in an index.
The Fund employs a “passive management”- or indexing- investment approached and seeks to track the investment results of an index composed of global companies that enter traditional markets with new digital forms of production and distribution, and are likely to disrupt an existing market or value network. Unlike many investment companies, the Fund is not “actively” managed. Therefore, it would not necessarily sell a security because the security’s issuer was in financial trouble unless that security is removed from the CIBC Atlas Clean Energy Index. Similarly, the Fund does not buy a security because the security is deemed attractive unless that security is added to the CIBC Atlas Clean Energy Index.
ALPS Portfolio Solutions Distributor, Inc. is the distributor for the ALPS Clean Energy ETF.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.