NYSE Euronext and Bloomberg new energy finance launch three additional clean energy indices

Indices for Solar, Wind and Energy Smart Technologies offer fresh ways for investors and ETF providers to get exposure to sectors of the rapidly-growing clean energy industry….

The three new sector indices cover solar energy, wind power and energy smart technologies (EST).
The solar index covers the entire value chain from polysilicon makers to photovoltaic project developers, the wind index everything from turbine component makers to wind farm builders and operators and the EST index everything from battery makers to suppliers of demand response systems for the electricity network. Each index is based on a basket of between 70 and 200 companies, quoted on different stock markets around the world, with a minimum threshold exposure to the relevant renewable energy or energy smart technology sectors.

The sectoral indices launched today are designed to act as a complement to the three regional clean energy indices launched late last year by NYSE Euronext and BNEF.

“The new indices accurately weight each company’s economic exposure to its sector and so provide a more granular way of tracking changing valuations in this fast-moving industry,” said George Patterson, managing director of European indices at NYSE Euronext Global Index Group, “NYSE Euronext has been involved in developing and calculating clean energy equity index products for the better part of a decade. Together with Bloomberg NEF we hope to see ETF providers using the solar, wind and EST indices as their basis for new products for investors that want a pooled, rather than stock-specific exposure, to these sectors.”

Michael Liebreich, chief executive of Bloomberg New Energy Finance, said: “These indices draw on the deep research our analysts have done over many years into value chains of these complex sectors. Many stock market investors may be somewhat familiar with the solar and wind industries, but they may not appreciate the wide range of companies involved, from material and component makers, to sub-assembly and final equipment manufacturers, from advisors to project developers. Trends become clearer when you look at all these activities.

“As for EST, this covers a complex set of technologies that will be absolutely key to the world’s chances of reducing emissions in the next 40 years, and we believe investors will benefit by understanding the different pieces – including smart grid, building and industrial efficiency, electric vehicles and power storage. Our analysts helped to define these sectors over the past five years, and we and NYSE Euronext strongly believe these indices will help to improve the market’s knowledge of them.”

Bloomberg New Energy Finance decided to partner with NYSE Euronext, to benefit from the latter’s expertise in indices and exchange-traded funds. “We look forward to working together on indices that will help to improve the market’s knowledge of these sectors,” Liebreich said.

Additional information:

The three NYSE-BNEF sector indices being launched today will be known officially as NYSE-BNEF Global Wind Energy Index, NYSE-BNEF Global Solar Energy Index and NYSE-BNEF Global Energy Smart Technologies Index.

The three new indices are weighted according to the individual company’s exposure to the relevant sector, as determined by Bloomberg New Energy Finance’s expert teams of sector-focused analysts. Constituent firms are identified by their position in each sector’s value chain, giving investors unprecedented visibility of intra-sector performance. Pure-play companies – those whose activities are focused entirely on the sector – are weighted at their full market capitalizations, while companies active only partly in clean energy, as well as those which are further back in the supply chain, are given a reduced weighting.

The indices draw on Bloomberg New Energy Finance’s database of organizations involved in clean energy and related sectors. This database has unique depth, incorporating the clean energy exposure of each company, ongoing expert analysis of sector definitions and boundaries, constancy of data upkeep and a true global approach to tracking all equities regardless of which exchange they are on. Bloomberg New Energy Finance analysts are presently tracking well over 1,000 quoted organizations with a moderate (10% or greater) percentage of their activity in clean energy, excluding those traded exclusively on OTC markets.

The table below shows that in the first three months of 2012, the EST Index has outperformed the other two. Figure 1 shows that the solar and wind indices outperformed the EST index dramatically until late 2007, but that since then they have under-performed it.

Table 1: USD price returns (%) for the three new indices

Figure 1: Performances compared

Source: Bloomberg

NYSE-BNEF Clean energy indices

Source: ETFWorld – Euronext