December 12, 2006
Another Clean Energy Exchange Traded Fund to Launch
by Bill Baue
First Trust Advisors is slated to introduce an ETF that tracks the NASDAQ Clean Edge US Liquid
Series Index early next year.
Following in the footsteps of the three existing exchange traded funds (ETFs) that track indexes
comprised of companies fueling the shift to cleaner energy, the first ETF based on the NASDAQ Clean
Edge US Index series is set to launch early next year. First Trust Advisors has signed a licensing agreement with NASDAQ and Clean Edge to introduce the First Trust NASDAQ Clean Edge US
Liquid Series Index Fund in January 2007.
"As the world's economy shifts away
from fossil fuel dependency towards efficient, renewable energy sources, investment opportunities
are being created daily in this new industry," said John Jacobs, executive vice president of
NASDAQ. "This index, and the ETF based on it, will provide the tools needed to capture the
investment opportunities created by this economic shift."
The 45 companies currently
comprising the NASDAQ Clean Edge US Index (ticker: CLEN),
which was launched in May 2006, fall into five sub-categories. These categories include renewable
electricity generation (such as solar photovoltaics), renewable fuels (such as biodiesel or
ethanol), energy storage and conversion (such as hydrogen fuel cells), energy intelligence (such as
smart grids), and advanced materials (such as nanotech.)
The September 2006 semi-annual
evaluation of the NASDAQ Clean Edge US Index resulted in one addition and one deletion. Added was
AVX Corporation (AVX), a manufacturer of passive
electronic components used to store and regulate electric energy that is 71 percent owned by
one of the major solar PV panel manufacturers in the world. Ultralife Batteries (ULBI) was deleted.
The NASDAQ Clean Edge US Index constituents overlap with those of the three other
clean energy oriented indexes (and hence the ETFs tracking them.) NASDAQ Clean Edge US Index
component SunPower (SPWR) is the top constituents of
the WilderHill Clean Energy Index (ECO), the
benchmark for the PowerShares WilderHill Clean Energy Portfolio (PBW--launched in March 2005).
SunPower, which manufactures semiconductor devices that directly convert sunlight into electricity,
is also the third biggest constituents of the Cleantech Index (CTIUS),
benchmark for the PowerShares Cleantech Portfolio (PZD--launched in
The Cleantech Index's second biggest constituent--American Power
Conversion (APCC)--is also a NASDAQ Clean Edge
US Index component. American Power Conversion manufactures products that improve the performance
of sensitive electronic devices such as computers and home electronics.
Showing up third
in the top constituents of the WilderHill Progressive Energy Index (WHPRO),
benchmark for the PowerShares WilderHill Progressive Energy Portfolio (PUW--launched
October 2006), is On Semiconductor (ONNN), a NASDAQ Clean Edge US Index
company. On Semiconductor produces components that provide high-performance clock management and
data flow management for precision computing and communications systems.
In addition to
the flagship index, there are three other indexes in the NASDAQ Clean Edge US Index series. One
focuses on total return (
CLNX), one on liquidity (
CELS), and one on both liquidity and total return (
CEXX). The First Trust ETF tracks CELS.