Earlier this month, we covered a new exchange-traded fund (ETF) set to hit the ASX boards in the ‘near future’.
That ETF was the VanEck Vectors Global Clean Energy ETF (ASX: CLNE), and it indeed listed on the ASX as of 10 March.
And it’s been a pretty good debut so far. At the time of writing, this ETF is up 1.43% from its initial public offering (IPO) price. At one point last week, it was up almost 6%.
Investing in global, clean energy with an investment that is on the up, what’s not to like?
Well, quite a bit, says a new report from the Australian Financial Review (AFR) today.
According to the AFR, this Global Clean Energy ETF is now the most shorted share on the entire ASX. If you’re not familiar with short selling, it involves the process of borrowing shares from another investor to sell at a later date.
The ‘shorter’ makes money if the shares fall in value over this time. Put simply, shorting is betting the price of a share (or ETF in this case) will fall.
Shorting a clean energy ETF?
According to the report, 17% of this ETF’s units are being held short. That makes it the most shorted share on the ASX.
The reason? The AFR argues that it is because of “concern of a growing bubble in climate-friendly investing”. As well as a sense that “investors are piling cash into anything that looks ‘green’”.
It notes that globally, US$350 billion has been invested in ESG (environmental, social and governance criteria) assets in 2020. That’s double the previous year.
The report also notes that the Global Clean Energy ETF’s largest holding is Plug Power Inc (NASDAQ: PLUG). Plug Power is a company that has risen more than 1,200% over the past year but has cratered in the past week. This is reportedly due to Plug warnings it would have to “restate its financial statements” for 2018 and 2019 after “finding errors”.
According to VanEck, Plug Power is still the ETFs largest holding. It has a weighting of 9.32% in the fund.
With that in mind, it’s understandable why some investors are getting nervous over the Global Clean Energy ETF.
Contrary to some popular opinion, it’s worth noting that ‘investing’ in a company doesn’t directly result in the company receiving more money.
If more capital flows into a company, it just means investors are just paying other investors more money for the shares.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
More reading
- Is the Commonwealth Bank (ASX:CBA) share price a buy or hold?
- Why the Elders (ASX:ELD) share price is outperforming the ASX today
- How much have investors made (or lost) on Zip (ASX:Z1P) shares?
- Brokers are bullish about these 3 ASX 200 shares
- Where is the Flight Centre (ASX:FLT) share price going in 2021?
Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post Why the ASX’s most shorted share is a clean energy ETF appeared first on The Motley Fool Australia.
from The Motley Fool Australia https://ift.tt/3eLKdD5
Leave a Reply