Wednesday, June 18, 2008

ETF Revolution: First Pure Wind ETF Launched Today

First Trust launched the first ever wind sector ETF today, ticker symbol (FAN) will track the performance of the ISE Global Wind Energy Index.

From First Trust’s website: “The index is a modified market capitalization weighted index of publicly traded companies throughout the world that are active in the wind energy industry based on analysis of the products and services offered by those companies.”

With estimates from the U.S. Department of Energy that wind power could generate 20% of electricity by the year 2030, it looks like the ETF will play right at [Jim] Cramer favorites like Trinity (TRN) and Otter Tail (OTTR), as well as many international giants in Asia and Europe. See the full ISE Global Wind Energy Index here.

I’m surprised this ETF is the first of its kind. In 2008, with so much speculation involving alternative energy, I expected to see a wind ETF already trading. The closest thing I could find to a wind ETF was the Market Vectors Global Alternative Energy (GEX), whose performance has been quite unimpressive to say the least YTD. Anyway, this is a great way for wind bulls to segregate themselves from other forms of alternative energy.

Wind energy certainly has some advantages over the field: It is relatively inexpensive and about as ‘green’ as you can get (renewable and environmentally clean). It is only a matter of time before the United States catches up to the likes of Denmark and Germany. Wind power accounts for 19% and 6% of electricity in the two countries, respectively. As such, I have a long term bullish sentiment on FAN, especially because of its global diversity of components.

FAN opened around $31.00 today with around 275,000 shares traded as of early afternoon on Wednesday. This certainly will not be the last we hear of this one.

Disclosure: none.

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