Alternative Investments/ESG: New Hydrogen ETF From Direxion

The Direxion Hydrogen ETF (HJEN) will give investors exposure to companies powering the clean hydrogen economy.

As investors accord increasing importance to ESG and clean energy in their portfolios, hydrogen is now making its way onto the center-stage of fuels that are renewable, zero-emission, and a store of energy.

The promise of hydrogen

The lightest and most abundant element in the universe, after extraction hydrogen acts as an energy carrier similar to electricity that offers high-density energy, is versatile enough for a broad range of applications, and could be the key to fulfilling the world’s growing energy needs without hampering global decarbonization efforts.

Consider this: overall global energy demand expected to increase between 25 to 30% by 2040, and 81% of global energy consumption is still drawn from fossil fuels.

However, hydrogen can fuel public transportation fleets as well as heat our homes in a sustainable manner. It is said to have the potential to generate $ 2.5 trillion of direct revenues and $ 11 trillion of indirect infrastructure by 2050.

What is enhancing hydrogen’s appeal as a fuel?

According to Direxion, the cost of production of green hydrogen has fallen 50% in the last five years and could fall another 60 to 90% by the end of the decade.

Meanwhile, the complex technology involved in the production, storage, and equipment and components of hydrogen has improved in recent years.

Lastly, hydrogen is rapidly gaining a reputation as a clean energy source that could ultimately go mainstream.

These factors point to hydrogen’s growth potential and investors should look to get in at the beginning of its success story.

The Direxion Hydrogen ETF

The ETF offers exposure to 30 companies across five hydrogen-related subthemes by tracking the Indxx Hydrogen Economy Index.

These are:

  • Hydrogen Production and Generation: Companies involved in the process of hydrogen generation, in either liquid or solid form.
  • Hydrogen Storage and Supply: Companies engaged in providing storage and transportation services of hydrogen. It also includes companies that supply hydrogen to various users and operate hydrogen fueling stations across countries.
  • Fuel Cell and Battery: Companies manufacturing fuel cells and batteries that are run on hydrogen-based technology.
  • Hydrogen Systems and Solutions: Companies offering equipment, components, or technology used in the hydrogen industry. Those involved in providing solutions and systems to the value chain across hydrogen generation, storage, and supply.
  • Membrane and Catalyst: Companies that design and produce membrane, filters, catalyst, or membrane assemblies for fuel cell, or hydrogen-related, technologies.

The fund has an expense ratio of 0.45%.

Related Story: LGIM’s Hydrogen Economy ETF Debuts In Europe

Image credit: Flickr                                                  

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