When Clean Energy Transition Speeds Up, Consider QCLN

The clean energy transition is underway, and it has been for some time, but in order for wide-ranging climate and decarbonization objectives to be met, that transition needs to gain speed.

Some experts are already discussing the need for that acceleration to materialize soon. Should that happen, various exchange traded funds, including the First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN), stand to benefit. QCLN follows the NASDAQ® Clean Edge® Green Energy Index.

“The index is a modified market capitalization weighted index designed to track the performance of clean energy companies that are publicly traded in the United States and includes companies engaged in manufacturing, development, distribution and installation of emerging clean-energy technologies including, but not limited to, solar photovoltaics, wind power, advanced batteries, fuel cells, and electric vehicles,” according to First Trust.

In other words, QCLN has the depth necessary to capitalize on an array of clean energy trends — a relevant trait at a time when the green transition is still widely viewed as being in the early innings.

“I do think everything that’s going on has made us all realize that we do need to speed up the transition. This is something that has been at work for the last several decades and yet in many ways, it still feels like we’re at Ground Zero,” said Apollo Global Management’s Olivia Wassenaar in an interview with CNBC’s Leslie Pickler.

Wassenaar points out that the amount of capital needed to adequately drive the green energy transition over the coming decade is staggering. She estimates that about $4.5 trillion annually needs to be spent on clean technologies to achieve various decarbonization goals.

The $2.21 billion QCLN holds 65 stocks, presenting investors with a broad portfolio that’s tethered to multiple renewable energy concepts. Tesla (NASDAQ:TSLA) and Nio (NYSE:NIO) combine for over 16% of the ETF’s weight, indicating that strong electric vehicle credibility and approximately a dozen solar equities reside in the fund. In other words, the QCLN portfolio mix is highly relevant in the current environment.

“As we look at where the sector is today, we’ve just seen such a massive evolution, that especially in things like wind and solar, there is absolutely the ability to finance these as well as other businesses like biofuels, bioenergy, batteries, etc.,” adds Apollo’s Wassenaar.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.