Trend: New ETFs are being launched to capitalize on hot sectors; a new ETF (ticker GRID) is focused on the smart grid, which will receive significant funding from the stimulus.
Investing in companies that are building the smart grid is not easy -- the sector has many companies, large and small. The GRID ETF makes investing in smart grid companies much easier for the small investor.
On November 16, 2009, First Trust Advisors L.P. launched the First Trust NASDAQ® Clean Edge ® Smart Grid Infrastructure Index Fund. This exchange-traded fund (ETF) trades on The NASDAQ® Stock Market under the ticker symbol (GRID). This ETF seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of an equity index called the NASDAQ OMX® Clean Edge® Smart Grid Infrastructure Index SM. The Index is designed to act as a transparent and liquid benchmark for the grid and energy infrastructure sector.
"With a growing demand for electricity and the increasingly inefficient infrastructure, the current power grid is unable to keep up with 21st century technology," according to Ryan Issakainen, Vice President and ETF Analyst at First Trust. "There's a growing movement towards a next generation power grid - Smart Grid. Electricity is one of the largest and most capital-intensive sectors in our economy and we are tremendously excited about the potential that an investment in this industry represents."
The Index includes companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and enabling software used by the smart grid infrastructure sector. First Trust will be the investment advisor for the ETF.
Investment Objective/Strategy - This exchange-traded fund seeks investment results that correspond generally to the price and yield, before the Fund's fees and expenses, of an equity index called the NASDAQ OMX® Clean Edge® Smart Grid Infrastructure IndexSM.
- The index is designed to track the performance of common stocks in the grid and electric energy infrastructure sector.The index includes companies that are primarily engaged and involved in electric grid, electric meters and devices, networks, energy storage and management, and enabling software used by the smart grid infrastructure sector.
- To be included in the index, a security must meet certain criteria including being classified as a smart grid, electric infrastructure and/or other grid-related activities company according to Clean Edge, have a minimum float-adjusted worldwide market capitalization of $100 million, and have a minimum three-month average daily dollar trading volume of $500 thousand.
- The index employs a modified market-capitalization weighting methodology. At each evaluation, the index securities are classified as Pure Play or Diversified. The Pure Play securities are given a collective weight of 80% and the Diversified securities are given a collective weight of 20% in the index.
- The index is rebalanced quarterly and reconstituted semi-annually.
Disclosure: We may own shares of this ETF at any time.