Claymore Investments, the Canadian asset management arm of U.S. exchange-traded fund provider Claymore Securities, is joining the ranks of the green-minded asset managers by launching a global sustainability ETF.

The ETF launch, scheduled for some time in the next two weeks, coincides with the creation by KLD Indexes and Jantzi Research of the Global Environment 60 Index (GE60), to be published by FTSE and used by Claymore for the new ETF.

The Claymore fund has not been assigned a ticker yet, but will trade on the Toronto Stock Exchange.

While there has been a rash of sustainability and environmentally themed ETFs in the U.S., Claymore believes the new ETF will be the first such portfolio in the Canadian ETF market.

"Canada is a fairly small market and the first-mover advantage is less important than long-term asset gathering," said Som Seif, chief executive of Claymore's Canadian asset manager. "You always want to be first with an idea, but we would still think this investment idea made sense if we were second."

The Global Environment 60 Index components are pure-play global companies that derive 50% or more of their business from products or services related to one of five environmental themes: alternative energy, clean technology, sustainable water, green building and pollution prevention.

The index is equally weighted between each theme, with KLD Indexes and Jantzi selecting the top 12 companies by float-adjusted market capitalization in each area, for a total of 60 companies.

The Global Environment 60 Index is to be the first benchmark in a new Global Environment Index (GEI) series created by KLD and Jantzi and published by FTSE. Indexes will be created covering each of the five major sustainability themes separately, as well as a composite index incorporating all of the constituents across the five themed indexes.

While the additional indexes could serve as the basis for ETFs, Seif said the Canadian market is not big enough to merit additional launches. Claymore Securities, the U.S. parent company, said at this point it is not launching any ETFs based on the KLD Jantzi indexes.

The index providers define the five major themes in this way:

• Sustainable Water: products and services focused on water and wastewater treatment; water infrastructure; or water resource management and efficiency.
• Alternative Energy: products and services that promote the generation of power using renewable or cleaner sources (i.e., cleaner than conventional fossil fuels) or the development of clean or cleaner power and energy technology.
• Clean Technology: Products and services that deliver equal or superior performance while reducing energy use and natural resource consumption when compared to conventional offerings.
• Green Building: Building material suppliers; home builders; or property managers that directly support or have a confirmed commitment to achieving sustainable building standards (i.e., LEED, BREEAM, Energy Star Homes or other recognized standards of sustainable building) for all new construction.
• Pollution Prevention: Products and services focused on pollution prevention, waste minimization or recycling, including source reduction, in-process recycling, reuse/reclamation, resource recovery and treatment/abatement.

The prospectus for the new Claymore ETF can be found here.

 

Nevertheless, Jim Stanton says alternative energy, and the wind-energy market in particular, has a big future. Wind energy is already the second largest source of new power generation in the US. And it is backed by T. Boone Pickens' plan to wean America off foreign oil.

Jim says PBW and GEX are two clean-energy ETFs that look undervalued right now. He recommends FAN for a more specific wind ETF. 

This from the Smart Profits Report:

With the steady climb of oil prices over the past few years, it’s become apparent that higher prices are here to stay.

As a result, the market has spawned dozens of new alternative energy stocks - and subsequently, ETFs devoted to the sector.

However, with alternative energy technology developing rapidly and sub-sectors like wind, solar, geothermal, bio-fuels, and bio-mass all springing into the headlines, it can be tough to know which stocks or ETFs an investor should play.

Fortunately, ETFs give you broad exposure and diversity to certain markets, with less risk than owning individual stocks.

For example, the two most widely followed alternative energy ETFs are the PowerShares WilderHill Clean Energy ETF (AMEX: PBW), which is mostly made up of American companies, and the Market Vectors Global Alternative Energy ETF Trust (NYSE:GEX), which gives you international exposure to some of the largest companies dealing in wind power.

In 2007, these ETFs turned in outstanding performances, chalking up gains of 62% and 50% respectively. And GEX may have done even better, due to the fact that it did not begin trading until May 2007.

In 2008, however, the funds haven’t been able to sustain that performance. As of September 26, PBW is down about 40% for the year, while GEX has lost 25%.

“Springing” Back To PBW

Back in the spring (March 24, to be exact), I highlighted the performance of PBW in my “Sector Watch” piece. At the time, the stock was trading around $21 and had recently tested its January lows. With the chart pattern still bearish, I said it represented a good short-selling opportunity.

Before it rebounded last week, PBW had traded below $15. But as long as oil prices remain high, ETFs like PBW should come back into favor. Moreover, after the beating they’ve taken this year, they look like good value.

That said, I don’t like trying to pick bottoms, so let’s take a look at the daily chart of PBW for more clues…

As you can see, the downtrend line drawn from the highs last December currently sits at $18.95. As time goes by, this number will go lower, but a couple of closing prices above this downtrend line will signal a change in trend - and that the stock is probably worth buying.

Profits From Thin Air

Between PBW and GEX, though, I actually prefer GEX, due to its higher exposure to the wind power segment. This fast-growing area is gaining some serious momentum and greater investment, thanks to the publicity that T. Boone Pickens is bringing. Pickens is a very smart businessman, who is investing billions towards the largest “wind farm” in the U.S. And you can see why he’s on board…

Wind power is the second largest source of new power generation in the U.S., surpassed only by natural gas.

• In 2007, wind provided enough power to satisfy the residential electricity needs of 150 million people.
• Capacity increased by a record-breaking 20,000 megawatts, which puts the world total at 94,100 megawatts.
• According to the U.S. Department of Energy, since 1980, the cost of producing wind power has declined by as much as 90%.
• Electricity from new wind power projects will be cheaper than electricity from new conventional power plants by 2010.

If you’re a fan of wind power, there is a relatively new ETF that deals strictly with the field. It’s called First Trust ISE Global Wind Energy (NYSE: FAN) and it began trading in June 2008.

Having hit a high of $31.50 in June, FAN has sold off, along with the other alternative energy ETFs. Earlier this month, it traded as low as $20, so let’s take a look at the chart to see what the next move might be…

With only a few months of data to go on, projecting the stock’s next move is a little trickier, but we have enough information to draw a regression channel from the June highs. The upper band of the channel is currently around $24.15 and a couple of closes above that level should lead to higher prices for the stock. We’ll keep an eye on this one, as wind power continues to gain traction.

PS. Yesterday, Oxford Club's David Fessler described how the quiet passing of an $18 billion clean energy bill could mean 'big moves' for FAN and two other clean energy ETFs.

Source: Forget Washington's Hot Air... Here's How to Really Profit from Wind