Japan's Nuclear Crisis Boosts Clean Energy ETPs

ETF TIMES: Clean energy and natural gas ETPs performe well, as the nuclear crisis in Japan is seen as potentially dampening enthusiasm for nuclear power

Morningstar ETF Analysts 22 March, 2011 | 7:13PM
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New Listings: March 14 - 18
db x-trackers launched two new ETFs of ETFs on the Deutsche Börse. The two funds track multi-asset allocation indices, and will gain their exposure to asset classes like equity, fixed-income, and alternatives through investment in other db x-tracker ETFs. The db Stiftungs-ETF Stabilität has a minimum 75% weighting to fixed income, and equities are limited to 20% of the portfolio. The db Stiftungs-ETF Wachstum limits equities to a 30% weighting, with a minimum 65% allocated to fixed-income. An investment committee from DB Advisors will adjust the weightings and exposures of each fund quarterly to maximize total returns (as opposed to current income) while limiting volatility. Each ETF charges a total expense ratio (TER) of 0.75%.

Amundi launched three new ETFs on the Deutsche Börse. Two of the ETFs track the performance of equity indices, including the MSCI Europe Energy Index and the MSCI Emerging Markets Index. The Amundi ETF MSCI Europe Energy charges a TER of 0.25%, while the Amundi ETF MSCI Emerging Markets I charges 0.45%. The third ETF tracks the performance of the EuroMTS AAA Government Index, a fixed-income index which is limited to AAA-rated government bonds issued in the eurozone and denominated in euros, with an outstanding volume of at least EUR 2 billion and a remaining term to maturity of at least one year. It has a TER of 0.14%.

Best and Worst Performers for the Week of March 14 - 18
With the equity markets having a poor week, the best performing ETPs included volatility ETFs (which are generally negatively correlated with equity markets), as well as numerous ETCs including lead, carbon and silver. Clean energy and natural gas funds also performed well, as the nuclear crisis in Japan could dampen worldwide enthusiasm for nuclear power and provide a boost for alternative low-emission energy sources.

Unsurprisingly, the devastating earthquake and tsunami in Japan had a huge impact on the markets and the worst-performing ETPs of the week. Japanese equity funds dropped in value as the destruction forced many companies to shut operations temporarily, and the repairs will eventually run into the trillions of yen. The ETFX WNA Global Nuclear Energy ETF performed even worse during the week as the resolution of the crisis at the Fukushima Daiichi reactor is still unknown. Many investors are fearful that the incident will prompt governments around the world to re-evaluate their nuclear energy ambitions, and in fact China has already announced plans to temporarily put a freeze on construction of new reactors while it evaluates their safety.

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Morningstar ETF Analysts  research hundreds of ETFs available to European investors. The Morningstar Rating for ETFs is based on a risk-adjusted performance measure.

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