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Q1 2020: INDEX REVIEW & TOP STORIES

Quarterly overview of stock index performance and the top trends impacting the state of clean tech.

Covid-19 and the resulting pandemic brought the stock market – and the entire global economy – to its knees during Q1. With hundreds of millions of people on lockdown/stay-at-home orders worldwide, global supply chains frayed and massively disrupted, and companies and countries adjusting growth projections downward, the markets, not surprisingly, declined significantly during the first three months of 2020.

As of March 31, 2020

CELS

(U.S. Clean Energy)

GWE (Global Wind)

HHO

(U.S. Water)

 QGRD (Global Grid)

S&P 500

IXE

(Energy Select)

Q1 (Total Return)

-19.00%

-16.14%

-19.80%

-21.32%

-19.60%

-50.74%

12-Month (Total Return)

1.27%

-3.55%

-5.02%

0.91%

-6.98%

-52.54%

On a total return basis for Q1 2020, GWE (global wind) decreased 16.14%, CELS (U.S. clean energy) was down 19%, HHO (U.S. water) declined 19.80%, and QGRD (global smart grid & grid infrastructure) was down 21.32%. During the same time frame, the S&P 500 was down 19.60%, reflecting a similar decline to our four Nasdaq-Clean Edge thematic indexes. Traditional fossil fuels, however, took a double hit, from not only the coronavirus, but also an oil price war between Saudi Arabia and Russia which saw oil prices crater. Against this backdrop, the IXE (Energy Select Sector Index) was down 50.74% (nearly triple the decline of U.S.-listed clean energy), during the first three months of the year.

Over the past 12 months (total return basis through the end of March), all of our Nasdaq-Clean Edge indexes outperformed both the S&P 500 and the IXE. CELS was the top Nasdaq-Clean Edge index performer, rising 1.27%, followed by QGRD up 0.91%, GWE down 3.55%, and HHO down 5.02%. During the same time frame, the S&P 500 declined 6.98% and IXE was down 52.54%.


First Trust ETFs tracking Nasdaq Clean Edge indexes equaled more than $700 million in assets under management as of April 7, 2020.

Best and Worst Performers (Index Constituents Ranked by Price Return)

Below is a list of the top 10 best and worst constituent performers across all Clean Edge Nasdaq indexes (CELS, QGRD, HHO, and GWE).  

Best and Worst Constituents (Q1 2020)

Best

Worst

Adesto Technologies Corporation

31.6%

Wesco International Inc.

-61.5%

Tesla, Inc.

25.3%

Veoneer Inc.

-53.1%

Enphase Energy, Inc.

23.6%

Flowserve Corporation

-52.0%

Daqo New Energy Corporation

13.1%

Companhia de Saneamento Basico do Estado de Sao Paulo-SABESP (ADR)

-51.0%

NVIDIA Corporation

12.0%

Woodward Inc.

-49.8%

Plug Power, Inc. 

12.0%

Hexcel Corporation

-49.3%

BKW AG

11.9%

ON Semiconductor Corporation

-49.0%

Ballard Power Systems, Inc. 

6.0%

MasTec Inc.

-49.0%

BYD Co. Ltd.

4.8%

Aptiv PLC

-48.2%

TerraForm Power Inc.

2.5%

Digi International Inc.

-46.2%

LONG-SHORT STRATEGY BEATS OIL & GAS BY A WIDE MARGIN

The Energy Transition Long Short (ETLS) strategy continued to outperform the IXE index during both Q1 2020 and the 12-month period through March 31, 2020. For Q1, ETLS increased 2.67% compared to a decline of 50.74% for the IXE (which was hit by cratering fossil fuel prices due to the aforementioned Russia-Saudi Arabia oil price war and plummeting demand due to the coronavirus pandemic). Over a 12-month period, ETLS was up 36.67%, while the IXE declined 52.54%. Oil and gas companies with strong balance sheets will likely rebound from recent historic declines, but we see significant headwinds for the industry as oil price volatility continues to disrupt markets, the economics of fossil fuels remain severely constrained, and the energy transition progresses as many governments, corporations, and utilities maintain or even bolster their carbon-reduction and clean-energy targets.

Clean Edge partnered with FFI and Alpha Vee Solutions to create the ETLS, a rules-based alternative index strategy, to benchmark and capture the potential upside of a transition to a low-carbon economy. The strategy is long clean energy (from Clean Edge’s universe of clean energy companies) and short reserve-owning fossil fuel companies (selected from FFI's Carbon Underground 200 list using metrics that gauge a company’s exposure to stranded asset risk). Long and short positions are adjusted dynamically using Alpha Vee’s proprietary quality, value, and momentum factors. The strategy is reconstituted semi-annually and rebalanced quarterly. Please contact us to learn more about ETLS and licensing opportunities.

As of March 31, 2020

 ETLS

IXE

Q1 (Total Return)

2.67%

-50.74%

12-Month (Total Return)

36.67%

-52.54%

Q1 2020 TOP 15 STORIES: CLEAN ENERGY INVESTING, GREEN HYDROGEN, COAL PLANT CLOSURES, AND MORE 

Here are the top tweets (and links to source material) from Clean Edge during Q1 2020 based on overall engagement.

  1. Congrats Scott Jacobs (@scottiej1) and Jigar Shah (@JigarShahDC) and the whole crew at @GenerateCapital on your latest raise of $1B for #renewableenergy infrastructure development https://t.co/9ydY8QLnqG
  2. Great list of the top 100 most sustainable companies from @corporateknight. Many of the companies, including @Orsted (#1 in this year's rankings), @Vestas, and @americanwater are in our stock indexes tracking #cleanenergy, #water, and the #grid. https://t.co/3FnKSAoMAL
  3. There's a term/concept that's gaining traction: "Power-to-X." #powertox Could it be the key to a fully 100% #renewableenergy system? https://t.co/lpiMnIMhHr
  4. Two @ftportfolios (First Trust) ETFs based on @Nasdaq @CleanEdgeInc indexes made it into @businessinsider coverage of 20 #ESG funds that beat the market in 2019. See: https://t.co/tnofvruuFK
  5. This is a big deal! Coal is out! APS @apsFYI commits to eliminating #carbon #emissions by 2050 and to close #coal plant ahead of schedule. Quite a shift for Arizona's biggest utility -- the result of low #solar & #wind costs, public pressure, and new CEO. https://t.co/gtSMQqAn6X
  6. World’s largest asset manager @blackrock joins $41 trillion #climatechange #investing pact (Climate Action 100+) @ActOnClimate100 https://t.co/6C3ZDERMTo
  7. One of the next big advances in #ElectricVehicles could be in the sky. Check this out: Wright Electric @weflywright working to develop 186-seat #electric #airplane https://t.co/UUSh55WqvM
  8. Latest from @BloombergNEF: "In the third year of the Trump presidency, which has not been particularly supportive of renewables, U.S. clean energy investment set a new record by a country mile," said Ethan Zindler (@EthanAll) head of Americas for BNEF.https://t.co/U7PcrhYwaP
  9. K. Backs #Green #Hydrogen Demos. Awardees include @Orsted, @ITMPowerPlc, and @erminsight. #offshorewind #electrolysis #electrolyzer https://t.co/4AOgi5D2la
  10. Japan opens world's largest #greenhydrogen plant near #Fukushima disaster site. https://t.co/Q7azGXEBap
  11. Over the last decade or so, #Virginia has gradually transitioned from a #purple to #blue state. Now it will embark on another transition, from #fossilfuels to carbon-free electricity, becoming the first state in the South to target 100% #cleanenergy https://t.co/AKPE1c3kZR
  12. @blackrock C.E.O. Larry Fink: Climate Crisis Will Reshape Finance. “I believe we are on the edge of a fundamental reshaping of finance,” Mr. Fink wrote in his annual letter. “...climate risk is compelling investors to reassess core assumptions...” https://t.co/lwTxwUmwxN
  13. Just released: "The Global Risks 2020 Report" from the World Economic Forum @wef #Climate-related issues dominated all of the top-five long-term #risks in terms of likelihood https://t.co/lVFzvxEO6p
  14. Breaking news: @JeffBezos, @amazon founder and CEO, pledges $10 billion to launch Earth Fund for combating #ClimateChange. On #PresidentsDay this is how leaders should be acting! Well done!!! https://t.co/RDjI4WfCdW
  15. More #greenhydrogen news: Los Angeles aims to become the first U.S. city to use #renewable #hydrogen to produce electricity, with a goal of ending #naturalgas use entirely https://t.co/5OYtkBf85T

Disclaimer:

The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular financial product or an overall investment strategy. Clean Edge, Inc., does not make any recommendation to buy or sell any financial product or any representation about the financial condition of any company or fund.