Hydrogen – the CO2-free energy source of the future? If a multitude of researchers, analysts and investors have their way, then the potential climate-neutral successors of fossil fuels and drives are already slumbering on the stock exchanges. After HypoVereinsbank, Société Générale is now also issuing an open-end index certificate on the major players in the industry: The Solactive World Hydrogen Index can be invested under ISIN DE000SR7XYH0.
15 companies – with algorithmic selection for the equal weight index
The index provider Solactive defines the stock exchanges of industrialized nations (developed markets) as decisive for the selection universe. Then all stocks are filtered according to size (> US $ 200 million market capitalization) and liquidity criteria (6-month average of daily trading volume> US $ 5 million). When selecting the relevant companies that are active in hydrogen production, sales, storage and use, Solactive does not rely on the classic sector analysis, but on proprietary big data software: the software uses defined keywords to analyze Using artificial intelligence more than 500,000 data sources (financial news, company sources, social media etc.) and ranking the relevant companies. The most relevant top 15 are used equally weighted to form the index.
As of September 14, 2020, half of the components will be in North America (Air Products & Chemicals, Ballard Power, Bloom Energy, Cummings, FuelCell Energy, General Motors, Paccar, Plug Power), then Japan with Honda Motor, Tokyo Gas and Toyota Motor represented, followed by the European companies ITM Power, Linde, Nel and PowerCell Sweden.
An index review and reweighting takes place every six months; unscheduled adjustments, for example if the qualification thresholds are not reached or takeovers, are possible. The index is designed as a net return index; Dividends are therefore reinvested after deducting any taxes. The management fee is 1 percent p.a. Investors assume a (diversified) exchange rate risk, as only one company is currently quoted in euros.
Report conclusion: Anyone who wants to rely on individual hydrogen companies has to accept the dependence on individual research and production results and the resulting volatilities – a well diversified index protects investors from failure of individual companies in a dynamic industry.
This article does not constitute a recommendation to buy or sell on the Solactive World Hydrogen Index or investment products on the Solactive World Hydrogen Index. No liability is assumed for the correctness of the data.
Author: Thorsten Welgen
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