Updated: Jun 1
“A great new hydrogen-focused ETF (HDRO) that gives investors exposure to companies involved in the development of hydrogen-based energy and fuel technologies."
By: Allan R Kirby
About Defiance Next Gen H2 (HDRO)
Defiance ETFs has launched the Next Gen H2 (HDRO) ETF. This is the first hydrogen ETF in the US and is listed on the New York Stock Exchange with $2.5 million in assets and has a total of 25 holdings. So why HDRO? As per Defiances' fact sheet:
Hydrogen is a green fuel with the potential to transform how we harness, store and use energy. 90% of the world’s energy consumption is currently provided by fossil fuels. None of the existing alternative energy sources such as solar, wind, or biomass are able to provide sufficient, consistent, and cost-effective energy supply. Electrification alone cannot reduce emissions to zero.
Global policymakers are committed to sustainability and decarbonization. Biden’s election to US President has further propelled the green agenda to the fore, with the USA and EU both pledging to be climate-neutral by 2050, and China, Japan, and others designating billions for hydrogen research.
Hydrogen could generate 24% of our energy needs by 2050, creating as much as $11 trillion in investment opportunities over the next three decades.
HDRO allows investors to express a targeted view of future energy markets. It offers diversified exposure to the full spectrum of the hydrogen economy without over-exposure to any one company in this new and developing market. Source
Benefits of a Hydrogen ETF
ETFs contain a selection of stocks that offer broad market exposure or one that is focused on certain sectors based on an industry or region. In both cases, the risk is reduced because the ETF is not weighted to just one stock. The Hydrogen market is a good example; the market is still young and although there are lots of opportunities, no one truly does not know who the winners or losers will be over the long term. Risk is mitigated by investing in a broad range of Hydrogen focused companies through the Defiance Next Gen H2 (HDRO) ETF.
Bank of America suggests that hydrogen will generate 24% of our energy needs and create as much as $11 trillion in investment opportunities by 2050.
Defiance Next Gen H2 (HDRO)
Inception Date: March 9th, 2021.
Expense Ratio: .30% (Good).
Number of Holdings: 25 (Diversified).
Total Assets: $2.5 million (Low).
Sector Breakdown of the ETF:
Hydrogen and Fuel Cells: 66.72%
Industrial Gases: 21.67%
Hydrogen Generation Equipment: 11.62%
Top Holdings as a percentage includes:
Plug Power Inc - 14.45%
Fuelcell Energy Inc - 12.37%
Ballard Power Systems Inc - 8.05%
ITM Power - 6.80%
Nel Asa - 6.12%
Mitsubishi - 6.04%
Bloom Energy Corp - 5.88%
Air Liquide Sa - 5.10%
Ceres Power Hldgs - 4.90%
Linde Plc - 4.29%
Like all investments, the Hydrogen focused ETF may or may not be for you, so, take the time, do your research and see if Defiance Next Gen H2 (HDRO) should be to add to your portfolio.
There are many benefits to investing in an ETF which includes the following:
1. ETFs can be a great way to invest in a sector without the need to do a lot of research.
2. ETFs are diversified so the risk is reduced because you are not investing in a single stock.
3. you are automatically diversified.
4. Expense fees to run the ETF are very low.
5. It's easy to buy and sell ETF's.
6. Great investment for the more passive investor who does not want to be active with their investing .
Passive Investors are investors who prefer to buy and hold stocks but are not actively involved with the securities they hold. Passive investors do take care of their overall investment strategies, however, they tend to hold their investments over a longer period of time. Most passive investors invest their money into ETFs and Mutual Funds as these types of investments do not require investors to be actively involved. But many passive investors can and do invest in single stocks as well.
Disclosure: mysmallbank.com nor the author received any compensation from the mentioned securities for this article. The article is our opinion only and is written to help readers learn more about the ETFs mentioned in this article. Consider this as basic information only and utilize professional services and additional sources before making an investment decision.