+0.35%.
Environmental, social and governance investors who bought up hydrogen industry stocks last year are now learning a hard lesson, and it’s a reminder that the bright, shiny object can quickly dull.
Brett Manning, senior market analyst at Briefing.com, says it’s often the case that, once an ETF for a popular theme is created, the stocks that are tracked or selected as part of the portfolio have gone from attractive to expensive.
The first ETF of its kind, Alternative Harvest debuted in 2015, and its five-year return is down 1.51% according to Morningstar data.
It launched in 2008, and looking at yearly total return for the ETF using Morningstar data, the fund lost money almost annually from 2011 to 2019. In 2019, it rebounded, jumping 66.53%, and the following year it soared 234%.
It was a smart-beta ETF whose index was composed of U.S.-listed equities weighted by sentiment built by an independent, diverse crowd.
She notes over the past 10 years, thematic fund shareholders were subject to lower returns and higher volatility versus the Morningstar US Market Index, and that figure includes funds still around today.
Manning says investors may be drawn to niche products that target the latest trend, infrastructure investing, seeking out funds that may benefit from President Biden’s infrastructure plan.
It’s an ESG theme, but compared to a dozen years ago, the industry is undergoing sustainable structural change — falling costs and greater adoption among them.