Excerpt from a larger article about investing in clean energy ETFs, written for eToro
Who is behind Lyxor New Energy UCITS ETF?
Lyxor New Energy UCITS ETF is managed by Lyxor Asset Management, which belongs to the French group Société Générale. Founded in Paris in 1998, this company is considered one of Europe’s leading asset management firms, and is particularly popular in ETF management. It’s the third largest European ETF provider in terms of market liquidity, which is extraordinary considering that the company was founded merely twenty years ago.
Composition of Lyxor New Energy UCITS ETF
Lyxor New Energy UCITS ETF is predominantly composed of industrial companies (over 50%), followed by technology companies (around 25%) and utilities (18%). These are the three main sectors represented in this fund, including a wide arrange of companies specializing in automation and clean energy.
Lyxor New Energy UCITS ETF – Composition by country
By country, the most represented are the United States, France and Denmark, although it also invests in companies from Canada, Switzerland, Sweden, Ireland, Japan, Spain and Austria.
| United States | 37,48% |
| France | 19,98% |
| Denmark | 14,14% |
| Canada | 5,28% |
| Switzerland | 4,97% |
| Sweden | 4,26% |
| Ireland | 3,25% |
| Japan | 2,89% |
| Spain | 2,85% |
| Austria | 2,57% |
| Norway | 1,37% |
Lyxor New Energy UCITS ETF – Composition by company
In terms of its composition by company, the most represented is Schneider Electric, followed by Vestas Wind Systems and Carrier Global Corporation. Some of the main companies listed in this exchange-traded fund are as follows:
| Schneider Electric SE | 18,12% |
| Vestas Wind Systems A/S | 8,72% |
| Carrier Global Corp Ordinary Shares | 8,71% |
| Orsted A/S | 6,36% |
| STMicroelectronics NV | 5,13% |
| NIBE Industrier AB B | 4,40% |
| Enphase Energy Inc | 3,39% |
| Kingspan Group PLC | 3,12% |
Price Performance of the Lyxor New Energy UCITS ETF
Last year has been particularly positive for the Lyxor New Energy UCITS ETF, as it has managed to increase in value by 36.54%. These figures are quite good for an ETF of this type, but what is most interesting is that its projection points to be even higher, as the performance it offered several years ago was not that high.
| 1 year return | 3 years | 5 years | 10 years |
| 36,54% | 23,42% | 19,15% | 9,70% |
Pros and cons of the Lyxor New Energy UCITS ETF
The Lyxor New Energy UCITS ETF is undoubtedly one of the most interesting exchange-traded funds currently on the market, and certainly one of the most prominent in the renewable energy field. Let’s review some of the main pros and cons of investing in this fund.
Pros of investing in the Lyxor New Energy UCITS ETF
- It is one of Lyxor’s best exchange-traded funds. A true benchmark for exchange-traded funds in Europe, Lyxor has some of the best exchange-traded funds on the continent. Since its launch, the Lyxor New Energy UCITS ETF is one of the best performers for the company.
- Renewables are increasingly bullish in the markets. This is largely due to the momentum they are experiencing around the world, with the installation of large wind turbine arrays in the North Sea or ambitious photovoltaic and solar thermal projects in many countries around the world. The need to move away from fossil fuels is causing renewable energy companies to flourish – and their market is growing accordingly.
- Renewable energies are heavily subsidized. This, in turn, is boosting the profits for the companies specializing in the production and installation of renewable energy power plants. This has been particularly evident in recent years, and is expected to accelerate during this decade, as the climate emergency becomes ever more pressing.
- The performance of the Lyxor New Energy UCITS ETF is growing non-stop. The performance of this exchange-traded fund over the past year is much higher than in previous years. As a result, investors who place their funds in the Lyxor New Energy UCITS ETF are seeing increasing returns.
Cons of investing in the Lyxor New Energy UCITS ETF
- There are similar ETFs with better performance. ETFs such as the iShares Global Clean Energy ETF have better annual performance than the Lyxor New Energy UCITS ETF. However, this doesn’t mean that the Lyxor New Energy UCITS ETF is a bad investment, as its annual performance has also been very high. Probably the best idea is to invest in both ETFs as part of an investment diversification strategy.
Lyxor New Energy UCITS ETF – Dividend
If you have in mind investing in ETFs that offer a good dividend yield, the Lyxor New Energy UCITS ETF is definitely a good choice, as it’s an ETF with a distribution strategy that also boasts a fairly substantial dividend yield.
Currently, the dividend on the Lyxor New Energy UCITS ETF stands at 0.29, with a yield of 0.81%, which translates quite positively to your returns. Plus, if you want to maximize the yield on this dividend, you can always reinvest it in the Lyxor New Energy UCITS ETF itself to qualify for higher earnings in the future.
Lyxor New Energy UCITS ETF – Expenses and Fees
The expense ratio of the Lyxor New Energy UCITS ETF currently stands at 0.60%, which is quite reasonable. Other ETFs such as the iShares Global Clean Energy ETF have a slightly lower expense ratio, but there are also other similar ETFs, such as those from ARK, that have raised this ratio even higher. In this context, the Lyxor New Energy UCITS ETF has a fairly balanced expense ratio, which is in the interest of a moderate strategy.
Lyxor New Energy UCITS ETF and other renewable energy ETFs
ETFs dedicated to renewable energy are generally very bullish in recent years, for the simple reason that renewable energy is on the rise. By investing in a sector that is key to our energy future, these exchange-traded funds are achieving annual returns ranging from 30% to well into the 100% range. Some of the most important ETFs dedicated to renewable energies are the iShares Global Clean Energy ETF, the Invesco Solar ETF, or the Invesco WilderHill Clean Energy ETF.
| Lyxor New Energy UCITS ETF | iShares Global Clean Energy ETF | Invesco Solar ETF | Invesco WilderHill Clean Energy ETF | |
| Annual variation | 36,54% | 93,45% | 176,32% | 139,82% |
| 3 years variation | 23,42% | 35,24% | 50,59% | 48,94% |
| Dividend | 0,29 (0,81%) | N/A | 0,09 (0,11%) | 0,69 (0,79%) |
| TER | 0,60% | 0,46% | 0,69% | 0,70% |
Lyxor New Energy UCITS ETF Forecast – Is it worth investing in?
Renewable energy is becoming increasingly bullish – this is easy to see when you consider the tremendous investment being made by most of the world’s developed countries to reduce their fossil fuel consumption and expand their renewable energy production. For all these reasons, companies involved in the production of clean energy are in a sweet spot that we can take advantage of to make a quick profit by investing in them.
In this context, the Lyxor New Energy UCITS ETF is one of the best exchange-traded funds we can find in the market for investing in renewable energies. Not only does it have a very good distribution of shares of different companies specialized in the production of this type of clean energy, but it has also increased in value considerably in the past years, and is expected to continue to do so in the near future, following the upward trend in the sector.
For all these reasons, investing in the Lyxor New Energy UCITS ETF is probably a very good choice. We find ourselves in a key moment of transition that is ideal for investing in companies dedicated to the production of clean energy. When the world as a whole is striving to move away from one energy source and bet on others, the opportunity to get large profits in the process is truly unique.