Legal & General Investment Management, one of Europe’s largest asset managers, announced today the launch of the L&G Hydrogen Economy UCITS ETF. According to LGIM, the new fund is the first in Europe that aims to provide investors with exposure to the long-term investment opportunities offered by the transition to a low-carbon, hydrogen economy.
Hydrogen is viewed as one of the key building blocks of the transition to a cleaner energy future, given its ability to act both as a clean energy carrier and fuel, as well as a CO2-neutral feedstock for the production of green chemicals. Despite being the most abundant element in the universe, however, there are no pure hydrogen deposits on earth, and it must be extracted from other materials. The extraction process often creates pollutants and GHG emissions. Green or renewable hydrogen, on the other hand, relies on a renewable source of energy such as wind or solar to power the electrolysis process to extract hydrogen from water, with oxygen released as a byproduct.
Utilizing proprietary database information from data company GlobalData, the new ETF employs an actively managed strategy, seeking to invest in technologies and firms that enable the production of cheaper, clean forms of hydrogen and those that are expected to play an integral role in the hydrogen economy. The fund targets companies with a minimum market cap of $200 million, including and will include electrolyser manufacturers, hydrogen producers, fuel-cell manufacturers, specialist mobility providers, fuel-cell component suppliers, key industrial and utility companies, and others in the supply chain.
Howie Li, Head of ETFs at LGIM said:
“Access to clean hydrogen will be key to lowering emissions in harder to abate industries where electrification alone is not enough. The commitments being made to the hydrogen economy by governments and businesses around the world are creating long-term investment opportunities with short-term catalysts. We believe this fund offers investors early access to this fast evolving industry and allows investors the ability to control the amount of hydrogen exposure into their portfolio alongside our clean energy and battery ETFs. As a package, the hydrogen ETF will complement these other two funds to provide investors with the ability to capture growth to be found in clean energy generation and energy storage.”
According to LGIM, the launch follows growing investor demand aiming for exposure to the growing hydrogen economy, estimated to be worth $2.5 trillion in revenues and $11 trillion in infrastructure potential by 2050, driven by low-carbon government policies, technological advances, and the emergence of cheaper components and solutions.
James Crossley, Head of UK Retail Sales at LGIM, said:
“At LGIM, we believe in giving investors targeted, specific exposure to the full value chain of low-carbon solutions across the power production, storage and distribution energy cycles. The launch of the L&G Hydrogen Economy UCITS ETF expands on our market-leading thematic range and underscores our commitment to equipping investors with the portfolio tools they need to gain access to the key themes that will help us transition to a more sustainable world.”
LGIM stated that the new strategy is listed on the London Stock Exchange, Deutsche Boerse, Borsa Italiana, Six Swiss Exchange and the NYSE Euronext, and is available to UK and European intermediary and retail investors.