Transportation is one of the epicenters of climate-driven change. As such, a variety of related exchange traded funds are credible considerations in the net-zero conversation.
The IQ Cleaner Transport ETF (CLNR) is part of that group. CLNR follows the IQ Cleaner Transport Index and can act as complement to core environmental, social, and governance (ESG) positions within an investor’s portfolio.
On a related note, investors are often encouraged to view climate investing through a long-term lens, and there’s merit to that view, but there are ample near-term considerations in this investment thesis, and those enhance the relevancy of ETFs such as CLNR.
“Climate risk is investment risk, and the narrowing window for governments to reach net-zero goals means that investors need to start adapting their portfolios today. The net-zero journey is not just a 2050 story; it’s a now story,” according to BlackRock research.
While investors are increasingly familiar with the prospects for the electric vehicle (EV) industry and sales data confirm that bullishness, CLNR is about much more than a big stake in Tesla (NASDAQ:TSLA). The ETF taps into the broader clean transportation ecosystem — a trait that could position investors for long-term success.
CLNR is also geographically diverse, which is pertinent because clean transportation and the net zero transition are very much international endeavors.
“We see a global drive for more energy security accelerating the transition in the medium term, especially in Europe,” added BlackRock.
Europe has long been a net zero leader and is an increasingly receptive market for electric vehicle adoption, owing in large part to the continent being home to some of the world’s largest automotive companies. European countries, including auto giant Germany, combine for about 30% of the CLNR roster.
There’s more good news for patient investors considering CLNR. A case can be made that markets aren’t yet fully appreciating the potency of the clean transportation and net zero investment concepts.
“We also don’t think the markets have fully priced in the transition yet. Over time, markets are likely to value assets of companies better prepared for the transition more highly relative to others, in our view,” concluded BlackRock. “We like sectors with clear transition plans. Over a strategic horizon, we like sectors that stand to benefit more from the transition, such as tech and healthcare, because of their relatively low carbon emissions.”
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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.