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LGIM Launches Europe’s First Hydrogen ETF

By February 10, 2021 4   min read  (655 words)

February 10, 2021 |

fuelcellsworks, lgim, hydrogen

Legal & General Investment Management (LGIM) has launched the L&G Hydrogen Economy UCITS ETF, which provides investors with exposure to the long-term investment opportunity offered by the transition to a low-carbon, hydrogen economy.

This includes the technologies and firms that are enabling the production of cheaper, clean forms of hydrogen and those that are expected to play an integral role in the hydrogen economy.

It will build on and complement LGIM’s existing suite of sustainable thematic ETFs, such as the L&G Clean Energy UCITS ETF and the L&G Battery Value-Chain UCITS ETF. As policy and economics start to align towards an economy based on sustainable energy, LGIM has launched this strategy to provide investors with a precision tool to add exposure to the hydrogen economy value chain to their clean energy investments.  This hydrogen ETF can be used alongside the above funds to allow investors to increase exposure to the clean hydrogen economy alongside their investments in clean energy generation and energy storage.

By employing a dynamic, actively designed investment strategy by LGIM that leverages GlobalData’s unrivalled proprietary database of companies engaged in the hydrogen industry, the ETF will seek to gain exposure to the full hydrogen value chain. This means companies with a minimum market cap of USD200 million, including electrolyser manufacturers, hydrogen producers, fuel-cell manufacturers, specialist mobility providers, fuel-cell component suppliers, key industrial and utility companies, and others in the supply chain.

The global drive to cut carbon emissions is progressing and for the hydrogen sector in Europe, policymakers are encouraging these industries to switch to ‘green’ hydrogen produced without fossil fuels, which could reduce up to 830 million tonnes of global CO2 emissions according to IEA. This launch follows growing demand from clients and prospective investors, and aims to capitalise on the combination of low-carbon government policies, technological advances, and cheaper components that is facilitating the growth of the hydrogen economy, which is expected to be worth USD2.5 trillion in revenues and $11 trillion in infrastructure potential by 20501.

Commenting on the launch, Howie Li, Head of ETFs at LGIM, says: “Access to clean hydrogen will be key to lowering emissions in harder to abate industries where electrification alone is not enough. The commitments being made to the hydrogen economy by governments and businesses around the world are creating long-term investment opportunities with short-term catalysts. We believe this fund offers investors early access to this fast evolving industry and allows investors the ability to control the amount of hydrogen exposure into their portfolio alongside our clean energy and battery ETFs.  As a package, the hydrogen ETF will complement these other two funds to provide investors with the ability to capture growth to be found in clean energy generation and energy storage.”

The strategy is listed on the London Stock Exchange, Deutsche Boerse, Borsa Italiana, Six Swiss Exchange and the NYSE Euronext, and is available to UK and European intermediary and retail investors.

James Crossley, Head of UK Retail Sales at LGIM, adds: “At LGIM, we believe in giving investors targeted, specific exposure to the full value chain of low-carbon solutions across the power production, storage and distribution energy cycles. The launch of the L&G Hydrogen Economy UCITS ETF expands on our market-leading thematic range and underscores our commitment to equipping investors with the portfolio tools they need to gain access to the key themes that will help us transition to a more sustainable world.”

The fund is the latest addition to LGIM’s existing thematic range, taking it to ten specialist funds, covering a number of disruptive technology themes, such as the USD2.57 billion L&G Cyber Security UCITS ETF, the $650m L&G Battery Value-Chain UCITS ETF and USD1.44 billion L&G ROBO Global Robotics and Automation UCITS ETF. The team hopes to build on recent positive performance across the range, with all LGIM’s thematic ETF strategies outperforming the MSCI World Index in 2020 by at least 35 per cent.

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