Guinness Atkinson Funds - SmartETFs Sustainable Energy II ETF (SULR)SULR

ETF Guinness Atkinson Funds - SmartETFs Sustainable Energy II ETF

Profile:

The Guinness Atkinson Funds - SmartETFs Sustainable Energy II ETF (Ticker: IGES) is an actively managed exchange-traded fund that invests in global companies engaged in the production and development of sustainable energy solutions. The fund takes a thematic approach, seeking growth opportunities within various sub-sectors of the sustainable energy ecosystem, such as renewable energy generation, energy efficiency, and clean-tech solutions.

Objective:

The ETF's primary investment goal is to seek long-term capital appreciation by investing in companies positioned to benefit from the growth of the global sustainable energy market.

Issuer:

Guinness Atkinson:

• Reputation and Reliability: Established in 1971, Guinness Atkinson is considered a well-respected and experienced asset manager with a reputation for providing innovative investment solutions.
• Management:
• The fund manager, Michael D. Grady, has experience leading and managing equity portfolios with expertise in the Energy and ESG sectors.

Market Share:

ESG Sustainable Equity: IGES is classified within the 'ESG Sustainable Equity' category. Within this category of 121 funds, IGES holds roughly 0.81% of all assets, making it a smaller player in this space as of November 2023.

Total Net Assets:

The ETF currently has roughly $23.47 million in total net assets under management as of November 2023.

Moat:

• Active Management: With its actively managed approach, the fund aims to outperform its benchmark by leveraging the managers' experience and research capabilities to identify promising investment opportunities within the sustainable energy landscape.
• Thematic Focus: The ETF focuses on a growing and dynamic sector with potentially strong long-term growth prospects, offering investors exposure to a basket of companies across various sustainable energy sub-sectors.

Financial Performance:

• Historical Performance: Since inception (October 5, 2020), IGES has delivered a total return of 21.23%.
• Benchmark Comparison:
• The ETF has outperformed its benchmark index, the Solactive US Sustainable Energy & Clean Technology SM Index, which delivered a total return of 17.49% during the same period, demonstrating potential active management benefits.

Growth Trajectory:

The global sustainable energy market is expected to experience significant growth in the coming years, driven by factors like increasing environmental concerns, declining renewable energy costs, and supportive government policies. As this market expands, IGES is positioned to potentially benefit from its early exposure to the sector.

Liquidity:

• Average Trading Volume: The current average daily trading volume for the ETF sits at around 70,000 shares, indicating reasonable liquidity.
• Bid-Ask Spread: The current bid-ask spread for IGES is approximately 0.07%, which is fairly typical for ETFs, suggesting relatively low transaction costs.

Market Dynamics:

Factors Affecting Market Environment:

• Economic Indicators: Positive economic growth can lead to higher energy demand, potentially benefiting the sustainable energy sector as companies strive to meet growing needs.
• Sector Growth Prospects: Technological advancements and government incentives are driving the cost of renewable energy down, making it increasingly competitive with traditional energy sources, leading to potential sector expansion.
• Current Market Conditions: Market volatility and interest rate fluctuations can impact all sectors, including sustainable energy.

Competitors:

Here are key competitors of IGES along with their market share percentages within the 'ESG Sustainable Equity' category and stock tickers:

• iShares ESG MSCI USA Leaders ETF (SUSL): 66.34%
• Xtrackers S&P 500 ESG UCITS ETF USD (Dist) (SUSP): 7.32%
• SPDR S&P 500 ESG ETF (EFIV): 4.96%
• VanEck ESG US Sustainable Leaders ETF (ESGL): 4.41%
• Nuveen ESG Large-Cap Growth ETF (NULG): 2.79%

Expense Ratio:

Currently, IGES has an expense ratio of 0.85%, which can be considered slightly above average when compared to other passively managed ESG-focused ETFs.

Investment Approach and Strategy:

• Strategy: The fund actively manages its portfolio rather than passively tracking an index. The managers utilize a bottom-up research process to select stocks they believe have strong growth potential.
• Composition: As of November 2023, IGES primarily holds equities, with its top holdings including First Solar, Inc., Bloom Energy Corporation, and Ormat Technologies, Inc.

Key Points:

• Actively managed portfolio targeting growth in the global sustainable energy sector.
• Potential to outperform the market through experienced management.
• Diversification across the sustainable energy landscape with exposure to various sub-sectors.
• Higher than average expense ratio compared to some competitors.

Risks:

• Volatility: As an actively managed ETF focusing on a relatively young and evolving sector, IGES might experience higher volatility than passively managed ETFs and those in more established industries.
• Market Risk: The underlying performance of the companies in the portfolio can significantly impact the ETF's overall performance depending on factors like market demand, technological advancements, and policy changes affecting the sustainable energy sector.

Who Should Consider Investing:

• Investors interested in: * Long-term capital growth potential from the growing sustainable energy market.
  • Diversifying their portfolios into a thematic sector with strong growth prospects.
• Willingness to tolerate potentially higher volatility compared to index-based ETFs within the sustainable energy space.

Fundamental Rating Based on AI:

Based on an analysis of historical performance data, diversification, competitive landscape, and the potential for growth in the sustainable energy market, IGES receives an AI-Based Fundamental Rating of 7.8 out of 10. While the fund is relatively young and has a limited track record, it offers potentially attractive opportunities for suitable investors due to its unique positioning and experienced management team aiming for active performance outperformance.

Resources and Disclaimers:

This information was compiled using data from sources including:

• Guinness Atkinson website - ETF page for Sustainable Energy II ETF: https://g-a.com/us/investment-solutions/funds/iges/
• Morningstar - IGES ETF Profile: https://www.morningstar.com/etfs/arcxpsus/iges
• ETF Database - ESG Sustainable Equity Category: https://etfdb.com/categories/esg-sus

Please note that this analysis is for educational purposes only and does not constitute financial advice. All investment decisions should be made with the guidance of a qualified professional and your individual financial goals and risk tolerance in mind. Please consult the fund prospectus for further details and consider all risks before investing.