The swelling size of a BlackRock ETF that invests in clean energy stocks has forced S&P to expand the underlying index from 30 stocks to 100. But an Aussie ETF tracking the index doesn't want to change.
Index giant S&P's Global Clean Energy Index launched a consultation last year on how the index is built. It aimed to reduce concentration of individual stocks, easing liquidity requirements, and improving index replication.
The results, made public on March 24 and coming into effect on April 19, will take the index from 30 stocks to 100, alongside changes to exposure scores and the maximum weight allowed to them.
Not being restricted to just 30 stocks will be a welcome change at iShares' Global Clean Energy ETF (NASDAQ: ICLN), which has grown to over USD $5.7 billion.
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However, for smaller funds tracking the ETF, the move to a bigger portfolio that travel away from the highest clean energy rating of "one" may not be a welcome change.
VanEck launched an ASX-listed fund tracking the index on March 10, called the VanEck Vectors Global Clean Energy ETF (ASX: CLNE) as it saw investor interest from US President Joe Biden's infrastructure package.
CLNE was only $25 million in total assets as of yesterday.
Given the smaller size of the ETF, VanEck has decided to stick to the smaller, 30-strong index, which S&P is now calling the Global Clean Energy Select.
"We think staying with the existing index is in the best interest of investors [for exposure] to a select group of clean energy exposures," VanEck deputy head of investments and capital markets Jamie Hannah said.