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Trackinsight: Hydrogen ETFs battered by higher rates prospects

02/10/2022 | 11:45am EDT

Hydrogen ETFs have been recently battered by the Covid-19 reopening and rising inflation. Central banks imply that they could speed up rate hikes.

hydrogen economy has a key role to play in the global energy transition by helping to diversify energy sources worldwide, foster business and technological innovation as drivers for long-term economic growth, and decarbonize the world we live in. The ongoing and future investments in the hydrogen economy make the industry a potentially lucrative target for many investors to prey on. According to the Hydrogen Council, the total investment into Hydrogen projects and along the whole value chain amounts to an estimated $500 billion through 2030. 

Despite the bright outlook, Hydrogen ETFs have fallen victims to sector rotation as investors exit risky assets and seek refuge in value and other safer assets. The rising inflation led central banks to take a hawkish stance, implying that they could speed up rate hikes — a bad omen for futuristic stocks or themes like Hydrogen. Year-to-date, the hydrogen ETFs line-up have fallen -20% on average. Investors who see opportunities in buying the dip can explore available ETFs in their respective regions.

Hydrogen ETFs for investors in America 

In America, investors could choose between the Defiance Next Gen H2 ETF (HDRO), Global X Hydrogen ETF (HYDR), Direxion Hydrogen ETF (HJEN), or Horizons Global Hydrogen Index ETF (HYDR). The largest by assets (AUM) among the three, with $52.7 million in AUM is HDRO. The fund tracks the BlueStar Global Hydrogen & Next Gen Fuel Cell Index and provides exposure to globally listed companies that generate at least 50% of their revenue from their involvement in the development of hydrogen-based energy sources, fuel cell technologies and industrial gases. Its top investments include Plug Power (8.69%), Nel ASA (5.89%), Ballard Power Systems (5.45%), SFC Energy (5.35%), and Doosan Fuel Cell (5.31%). HDRO has a total expense ratio of 0.30% trades on the NYSE. 

Hydrogen ETFs for investors in Europe 

L&G Hydrogen Economy UCITS ETF (HTWO) is the largest pure hydrogen ETF with over $524 million in assets under management. The fund tracks the Solactive Hydrogen Economy Index NTR and invests in globally listed companies engaged in the hydrogen economy, such as energy input, production, transport, storage, and end-use. Among the leading names in the fund are Toyota Motor Corp (4.65%), Chemours Co. (4.60%), Xcel Energy Inc (4.52%), Weichai Power Co. Ltd. (4.49%), and Uniper AG (4.26%). HTWO has a total expense ratio of 0.49% and trades on the London Stock Exchange (HTWO, USD or HTWG, GBP), the Borsa Italiana (HTWO, EUR), the Deutsche Börse (HTMW, EUR), and the SIX Swiss Exchange (HTWO, CHF). 

European investors can also gain access to the nascent theme through VanEck Vectors Hydrogen Economy UCITS ETF (HDGB) and the newly launched Global X Hydrogen UCITS ETF (HYDR). 

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© 2022
Stocks mentioned in the article
ChangeLast1st jan.
BALLARD POWER SYSTEMS INC. 0.25% 8.13 Delayed Quote.-48.84%
DEUTSCHE BÖRSE AG -3.23% 154.45 Delayed Quote.8.50%
DOOSAN FUEL CELL CO., LTD. -3.00% 29150 End-of-day quote.-39.27%
LONDON STOCK EXCHANGE PLC -1.44% 7522 Delayed Quote.10.13%
NEL ASA 5.47% 12.62 Real-time Quote.-21.33%
PLUG POWER INC. 1.90% 16.9 Delayed Quote.-41.30%
PURE HYDROGEN CORPORATION LIMITED 12.82% 0.22 Delayed Quote.-60.00%
SFC ENERGY AG 1.46% 24.3 Delayed Quote.-15.67%
THE CHEMOURS COMPANY -2.59% 31.2 Delayed Quote.-4.59%
TOYOTA INDUSTRIES CORPORATION -4.64% 8010 Delayed Quote.-8.60%
TOYOTA MOTOR CORPORATION -1.57% 2067 Delayed Quote.-0.26%
UNIPER SE 10.30% 15.63 Delayed Quote.-66.10%
WEICHAI POWER CO., LTD. -0.16% 12.46 Delayed Quote.-18.35%
XCEL ENERGY 1.43% 71.77 Delayed Quote.3.71%
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