Renewable ETF: iShares vs L&G

[emersonboi]

Hi,

I wanted to invest in a renewable ETF and wanted to know your opinion on the two fastest growing ones.

iShares Global Clean Energy is the biggest one, has been around for more then a decade and seems to be a solid bet. However, I stumbled upon L&G Clean Energy. The ETF was created less then half a year ago and seems to be more balanced (more companies from different sectors) than the iShares one. Also the fund is accumulating which I prefer. So all signs point towards L&G, am I missing out on anything I should be aware of?

Greatful for every reply, have a nice day everyone.

 

[afonso]

@emersonboi They're different but I suppose both are fine. Ishares has slightly more established renewable companies in their top ten ownings as well as plenty of Chinese companies, which is probably a good idea considering they are a top installer of RE globally. Not liking Chinese investments is understandable too.

L&G has small-ish positions in "renewable" sectors like fossil industrials that also do biomass thermal energy. They may well be good bets when heating utilities need to ditch coal. Biomass isn't IMO the most sustainable investment after other heating solutions go mainstream, which they will. Pretty sure I read somewhere they have positions in mining equipment too.

But yes ishares is not hugely diverse, a large portion of it is solar and its peripherals and utility companies (although pretty good ones strategically IMO, like central EU hydropower) and I'd rather it be accumulating.

Don't do anything because someone on the internet said so, this is just my opinion.

 

[emersonboi]

@afonso Yeah the China part kinda puts me of. Also my understanding is that China has already given out contracts for RE manufacturers so the potential for growth is bigger in other countries.

Interesting point about biomass, haven't looked into all companies they hold, its just too many. But their factsheet states: "Moreover, the Index excludes certain companies: (a) that derive substantial revenues from coal mining; (b) involved in the production of controversial weapons; or (c) that, for a continuous period of three years, have been classified as being in breach of at least one of the UN Global Compact principles, which is a set of globally accepted standards on human rights, labour, environment and corruption." So I will just give them the benefit of the doubt in regards to mining.

Will probably go for L&G, no real reason, just have a better feeling.

 

[afonso]

@emersonboi I didn't look too closely either, just some things that struck my eye.

To clarify, as a Finn I heard some time ago that they bought some Metso-Outotec, a Finnish company which specialises in mining project planning, equipment and recycling, more in metals than coal I suppose. It's a Finnish company and Finland is some 5% (?) of their portfolio's geographic distribution, so I recommend digging into their holdings a bit to make sure. It may be a small position and thematically related to lithium mining, which is being planned in Finland as a part of the country's booming battery industry.

Well, it's a small thing but just something that caught my attention.

Edit. About China, it is worth noting that the whole of Far East (and big parts of Africa) is mostly under a Chinese umbrella, save for India, and they are quickly increasing their energy production and solar is often a very lucrative option. Chinese modules are also popular in Europe. But yes, China is always a risk because the company's future may already be planned by the state and their growth completely artificial. And then there's the ethics question.

 

[seekinghope]

@emersonboi I've bought in on iShares Global Clean Energy , but I would be interested in knowing more about L&G, maybe someone here will chime in!

 

[aliahsy]

@emersonboi I’m buying L&G because of reasons you have already mentioned: a) it is accumulating. b) it is more diversified.

 

[emersonboi]

@aliahsy seems like you came to the same conclusion as me.

Was just wondering if I overlooked something because you don't hear a lot about this ETF

 

[boothea92]

@aliahsy I wish there was accumulating IQQH too.

 

[primpoisepiety]

@emersonboi Sorry but what do you mean by “the fund is accumulating” and why this is good for you?

 

[lmms]

@emersonboi Usually investors go for large ETF with big size and long history because we can better trust an ETF that already exists for a long time. New ETFs like L&G Clean Energy have two potential risks: - First, the firm may liquidate the ETF after some years if it is not profitable enough. Second, because of small transaction volumes, you may have to pay high bid-ask spread.

For this particular ETF, I don't think they will liquidate the ETF soon as Clean Energy is a big hype at the moment. For the volume, I found that transactions are around 10000 per day which is quite small.

 

[emersonboi]

@lmms thanks for your insight. The volume in Germany is indeed only 10000, however in Milan its 40000. Not sure if the increased fees are worth the higher volume

 

[lmms]

@emersonboi I would say that if you only buy once and keep it for the long term, this issue is minor.

 

[ladysea27]

@emersonboi Coming back to this, when I wanted to invest in clean energy. I wanted to have a regular automatic investment, so say 100 EUR per month. My broker doesn't provide any plan for L&G but does for ishares. So, it was an easy decision for me.

If both would have been available as investment plans (monthly/quarterly), I would have chosen L&G mostly because it's accumulating and not distributing. If Ishares would offer accumulating (which it doesn't as of now) then I would stick with Ishares.

 

[khcrocker]

@emersonboi remind me! 3 days

 

[workupafuss]

@khcrocker RemindMe! 3 Days

 

[johnfifteentwelve]

@emersonboi RemindMe! One Week

 

[shir]

@emersonboi RemindMe! 7 hours

 

[goddey]

@emersonboi RemindMe! 3 Days

 

[ladysea27]

@emersonboi RemindMe! One Week

 

[resjudicata]

@emersonboi RemindMe! One Week