The ETF landscape continues to expand. With the recent launch of new products from major players like Charles Schwab to smaller investment firms that specialize in focused industry areas, there is no shortage of choice for the individual investor. While many of these are often a spin on well established domestic/international/bond indexes there is occasionally a fund that comes along that stands apart from the rest of the crowd.
Launched a couple of days ago, First Trust’s/Clean Edge Smart Grid ETF (GRID) fills this criteria. The fund is built around companies that focus primarily on smart grid technology plays and aims to track the NASDAQ OMX Clean Edge Smart Grid Infrastructure Index. This technology covers everything related to networks, energy storage, electric meters, enabling software and other elements involved in the electric infrastructure sector.
The fund aims to focus primarily on smart grid plays by weighting those companies deemed as smart grid “pure plays” much more (80%) than big companies with a fraction of their business in the smart grid arena (weighted at 20%). This essentially means that a larger weighting is given to companies that have a greater focus on these technologies. This means that a company like GE, while having a large presence in this area is weighted lower as these technologies only account for a relatively small part of its overall business operations.
Coming in with a 0.70% expense ratio, the fund is comprised of 29 holdings (full list here) that must each have a market cap of at least $100million. Each company must also be classified by Clean Edge as a smart grid, electric infrastructure, and/or other grid-related activities company. Clean Edge is the worlds first research and publishing company focused on the clean-tech sector and its highly regarded knowledge-base gives significant credence to the quality of companies found in the index.
GRID looks set to be a solid addition to the family of ETF’s related to building a sustainable energy future.
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