Today, April 22nd, is Earth Day and one of the topic being discussed is how to live a green life and save our environment. On this year’s Earth Day, the government also announced a plan to boost fuel efficiency by 25%, increasing per gallon mileage from 27.5 to 35.7, on the same day when the price of crude oil reached another record high, only a few cents away from breaking the $120/barrel milestone.
I don’t know how much impact this new proposal will have on the nation’s oil consumption, especially when the net standard won’t take effect until 2015. As an investor, one way we can save our planet is investing in companies that are in the business of exploring renewable energy such as solar power. For that, the newly incepted Claymore/MAC Global Solar Energy Index ETF (TAN) comes handy.
TAN, which was launched on April 15th, is a passive exchange-traded fund (as oppose to active ETF) that uses MAC Global Solar Energy Index (ticker SUNIDX) as benchmark. The index mainly tracks companies that either manufacture solar power related equipment or supply materials used in solar power system, or provide consulting, integration, or financing for solar power industry. Currently, the fund currently invested in 25 stocks, including many popular Chinese solar power players such as JA Solar and LKD Solar, etc. Companies covered by SUNIDX have market caps from $300 million to nearly $18 billion. Specifically, 42.65% of the components are small-cap stocks, 29.67% mid-cap, and 27.68% large-cap. According to the fund’s prospectus, the index is rebalanced on a quarterly basis.
The complete list of TAN’s components and their respective weightings in the index are as following:
- First Solar (FSLR): 8.87%
- Renewable Energy: 8.25%
- Q-Cells: 6.65%
- Suntech Power (STP): 6.32%
- Solarworld: 5.51%
- JA Solar (JASO): 5.39%
- Yingli Green Energy (YGE): 4.81%
- Sunpower (SPWR): 4.73%
- LDK Solar (LDK): 4.55%
- Memc Electronic Materials (WFR):4.45%
- Solaria Energia Y Medio Ambiente: 3.63%
- Centrotherm Photovoltaics: 3.44%
- Trina Solar (TSL): 3.27%
- Energy Conversion Devices (ENER): 3.25%
- Ersol Solar Energy: 3.14%
- Solarfun Power (SOLF): 3.03%
- Canadian Solar (CSIQ): 2.85%
- Solon Ag Fuer Solartechnik: 2.78%
- Evergreen Solar (ESLR): 2.75%
- Meyer Burger Technology: 2.43%
- Roth & Rau: 2.17%
- Conergy: 2.09%
- Manz Automation: 2.09%
- China Sunergy (CSUN): 1.94%
- Emcore (EMKR): 1.60%
The fund has an expense ratio of 0.65%.
Note: Claymore has also created some exotic ETFs in the past, but had to shut them down early this year after the funds failed to get investors attention. Hope this new offering can avoid that fate. The average daily volume of TAN, 530K, is indeed much higher than those funds that have been closed.