5 min readBy Ron Koren ETF Insider
How does the CTEC ETF work?
The CTEC ETF is a specialized investment fund that focuses on a specific sector. This exchange-traded fund offers investors exposure to a range of companies in this sector.
The issuer of the CTEC ETF, known as the Global X CleanTech ETF, is Global X Management Company LLC. This ETF was established to invest at least 80% of its total assets in the securities of the Indxx Global CleanTech Index and in American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) based on the securities in the Underlying Index. The Indxx Global CleanTech Index is designed to provide exposure to exchange-listed companies that are positioned to benefit from the increased adoption of CleanTech technologies, including renewable energy production, energy efficiency, smart grid, lithium-ion batteries, fuel cells, and pollution prevention/amelioration. The ETF uses a passive indexing approach and aims to achieve a high correlation with the performance of the Underlying Index. As of January 31, 2023, the Underlying Index had 29 constituents, and the ETF seeks to provide investors with a diversified way to invest in CleanTech companies globally.
While the primary objective of the Global X CleanTech ETF (CTEC) is to track the performance of the Indxx Global CleanTech Index, it also offers investors the potential for dividend distributions. The dividend eligibility for this ETF is contingent upon the dividend policies and performances of the CleanTech companies included in the underlying index. CleanTech companies are those generating at least 50% of their revenues from technologies related to renewable energy, energy efficiency, smart grid, lithium-ion batteries, fuel cells, or pollution prevention, as determined by the index provider, Indxx LLC. These dividends, if any, are typically distributed quarterly, but the amount and timing may vary based on the individual companies' dividend practices. Investors in CTEC may benefit from both capital appreciation and dividend income from this ETF.
Tracking the Indxx Global CleanTech Index is the primary objective of the CTEC (CleanTech ETF). CTEC invests at least 80% of its total assets in securities of the Indxx Global CleanTech Index, along with American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) based on the index's components. The Underlying Index is designed to offer exposure to exchange-listed companies actively involved in CleanTech, including renewable energy production, energy efficiency, smart grid technology, lithium-ion batteries, fuel cells, and pollution prevention. CTEC aims to closely follow the performance of these CleanTech companies, providing investors with a vehicle to participate in the growth of this environmentally conscious sector.
The correlation aspect of the Global X CleanTech ETF (CTEC) is important for investors seeking exposure to companies at the forefront of clean technology. CTEC tracks the Indxx Global CleanTech Index, and its correlation with clean energy and environmental technology sectors is expected to be significant. This strong correlation makes CTEC a valuable tool for investors looking to capitalize on the growing adoption of clean technology solutions and environmentally sustainable practices. To delve deeper into CTEC's correlations and identify potential overlaps with other assets, investors can leverage the ETF Insider web app, which offers comprehensive data visualization and analysis tools for various U.S. ETFs.
The CTEC Sector ETF focuses on investments in companies within the CleanTech sector. This ETF primarily invests in securities of the Indxx Global CleanTech Index, which includes companies involved in renewable energy production, energy efficiency and storage, smart grid technology, lithium-ion batteries, fuel cells, and pollution prevention/amelioration. The ETF aims to provide exposure to technologies aimed at improving renewable energy efficiency and reducing environmental impact, making it suitable for investors interested in sustainable and environmentally conscious industries. However, due to its concentration in a specific sector, it may carry a higher level of risk compared to more diversified ETFs.
The exposure characteristic of the Global X CleanTech ETF (CTEC) is centered around companies positioned to benefit from the increased adoption of technologies focused on improving renewable energy production efficiency and mitigating environmental effects. By tracking the Indxx Global CleanTech Index, CTEC offers investors access to a diversified portfolio of CleanTech Companies, which include those involved in renewable energy, energy efficiency, smart grid technology, lithium-ion batteries, fuel cells, and pollution prevention. This ETF provides exposure to global companies in various countries and industries, emphasizing the importance of sustainable and environmentally friendly technologies.
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