|
Here is an alternative investment
that can enhance your wealth and do some environmental good at the same time with
a newly launched ETF.
Alternative Investment Explanation
ETF stands for Exchange Traded
Fund and this type of investment was launched by the American Stock Exchange about
ten years ago. The Amex now lists more than 100 ETFs with over 100 billion in
assets.
In simple terms an ETF is a closed
end mutual fund that acts like a basket of securities tracking a broad stock or
bond market, stock industry sector, or international stock. The ETF gives the
benefit of diversification yet provides the simplicity of trading a single stock.
For example of you wanted to
invest in a fund that kept pace with the performance of the Dow Industrial Index
you could invest in the iShares Dow Industrial Fund. This is a fund managed by
iShares management that invests in the shares upon which this Dow index is based.
Your one investment would be spread into all these shares. This makes it very
easy to diversify into a concept and can provide tax efficiency and lower costs.
ETFs are commonplace as a class,
but some
ETFs can be a profitable alternative investment.
Alternative Investment Energy
Index
An example of an alternative
investment ETF is the WilderHill Clean Energy Index ( ECO ) that was launched
on the American Stock Exchange.
The index was created by two
long time clean energy advocates and consists of 37 top, U.S. clean energy companies.
These companies generally are
small cap, pure-play companies. Each company has to have at least a $50 million
market cap and must trade at a minimum of $1 per share to be in the index. No
fossil fuel, oil, nuclear or coal companies are allowed in the index. The index
does not include ‘cleaner’ technologies, like those that reduce the
impact of using fossil fuels. It consists of companies that a green energy investor,
or those seeking diversification, might want to invest in.
Alternative Investment Diversification
The shares that form this alternative
investment index on April 1, 2005 were:
Name Code % of Index
Evergreen Solar ESLR 3.46%
Energy Conv Devices ENER 3.34%
Quantum Fuel Sys Tech QTWW 3.21%
Emcore Corp EMKR 3.15%
Active Power ACPW 3.09%
Distributed Energy Sys DESC
3.06%
N.A. ORA 3.04%
Zoltek Co ZOLT 3.03%
Impco Technologies IMCO 3.01%
Ballard Power Systems BLDP 3.01%
Medis Technologies MDTL 2.98%
Scottish Power Ads SPI 2.96%
Mechanical Technology MKTY 2.93%
Maxwell Technologies MXWL 2.93%
Fuelcell Energy FCEL 2.93%
Ultralife Batteries ULBI 2.91%
Kyocera Corp Adr KYO 2.89%
Plug Power PLUG 2.87%
Hydrogenics Corp HYGS 2.84%
Capstone Turbine CPST 2.81%
Itron Inc ITRI 2.77%
Uqm Technologies UQM 2.70%
Power Integrations POWI 2.60%
Amer Power Conversion APCC 2.57%
Cree Inc CREE 2.52%
Intermagnetics Genl IMGC 2.50%
International Rectifier IRF
2.50%
Amer Superconductor AMSC 2.48%
Echelon Corp ELON 2.47%
Magnetek Inc MAG 2.39%
C&d Technologies CHP 2.26%
Idacorp Inc IDA 2.00%
Central Vt Pub Svc CV 1.96%
Calpine Corp CPN 1.93%
Air Products & Chem APD
1.49%
Praxair Inc PX 1.48%
Boc Group Ads BOX 1.48 %
Mgp Ingredients MGPI 1.47%
Last year this alternative investment
index was up 12.98% compared to the S&P500 Index, rising 10.88% and NASDAQ
rising 9.16% in the same period.
In March 2005, PowerShares Capital
Management LLC introduced an exchange traded fund (ETF) replicating the WilderHill
Clean Energy Index, the “PowerShares WilderHill Clean Energy Portfolio”
(Amex: PBW).
Shares started trading at $15
and at the beginning of the week were listed at $14.46
Alternative Investment Article
In a article in Red Herring,
Bruce Bond, president of PowerShares Capital Management said, “The fund
starts to legitimize clean energy as a group. Alternative energy companies are
still fairly new to the market, and most are not even categorized as part of the
energy industry in the major indexes. The S&P codes, for instance, list the
bulk of clean energy companies under ‘industrials,’ he said. Other
clean energy companies are categorized as ‘information technology,’
‘consumer discretionary,’ or ‘consumer staples.’
The index uses modified equal
dollar weighting and is composed of companies that are working in six clean energy
areas:
(1) Power Delivery and Conservation
(2) Cleaner Utilities
(3) Energy Conversion
(4) Cleaner Fuels
(5) Energy Storage
(6) Renewable Energy Harvesting
Alternative Investment
Source
PowerShares
Capital Management is passionate about delivering high
quality institutional investment management.
This is a new and needed way for investors to
tap into a great growth area. I recommend that you earn about this sector and
become an expert in this field.
Gary
PS. Learn more about alternative investment
tacticsat our upcoming International
Business and Investing Courses.
|
