What it means for your returns is that you end up with a Nasdaq 100 tracker.
And not just the 100 but in truth the top ten weights which amount to almost 50% of the index:
Components of the Nasdaq 100
# Company Symbol Weight Price Chg % Chg 1 Apple Inc AAPL 11.675 135.43
0.06 (0.04%) 2 Microsoft Corp MSFT 9.396 0.31 (0.13%) 3 Amazon.com Inc AMZN 8.342 3,276.00
-1.71 (-0.05%) 4 Tesla Inc TSLA 4.856 1.44 (0.18%) 5 Alphabet Inc GOOG 3.521 3.89 (0.18%) 6 Facebook Inc FB 3.299 -0.20 (-0.07%) 7 Alphabet Inc GOOGL 3.195 3.87 (0.18%) 8 NVIDIA Corp NVDA 2.859 -0.05 (-0.01%) 9 PayPal Holdings Inc PYPL 2.699 3.23 (1.08%) 10 Intel Corp INTC 1.955 0.19 (0.31%)
Why is this the case? Because there are, what's the number being bandied about, $30 trillion? Thirty trillion in assets that are being peddled as Environmental, Social and Governance sensitive names.
So there is a huge battle going on among the behemoth marketeers to be
the one to define what is meant by the terminology so as to advantage
their own businesses.
And these product packagers, BlackRock with $7 trillion, State Street with $3 trillion, Vanguard and Fidelity with $9 trillion between them, have the clout to call whatever they want whatever they want, and make it stick.
Here's the latest indicator of what's what via today's S&P Global Platts' "Commodity Tracker: 4 charts to watch this week:
....3. US corporate renewable power buyers procure 10.6 GW of capacity in 2020
What's happening? Tech giant Amazon procured 3.163 GW of renewable energy capacity in 2020, leading all large buyers, who collectively procured 10.6 GW of contracted capacity despite coronavirus pandemic-related challenges. This highlights corporate commitment to addressing climate change, the Renewable Energy Buyers Alliance said Feb. 10. S&P Global Ratings has said that, over the past year, more and more businesses have shifted focus to address issues closely linked to mitigation of and adaption to climate change.
What's next? There is significant potential to grow the corporate renewable energy procurement market by improving access to renewable electricity through key federal policy priorities, REBA said. Specifically, addressing capacity market construct issues will be central to improving existing markets and making them work for corporate customers, while expanding US wholesale power markets is an area where the Federal Energy Regulatory Commission can be helpful. Beyond the corporate sector, a drive by dozens of US electricity utility holding companies to provide ESG reports has brought to the forefront numerous new commitments to zero carbon emission goals, and an accompanying surge in plans to install thousands of megawatts of wind and solar generation over the next few decades....
....MUCH MORE, three more charts with commentary but this is the one I cherrypicked to make my point.
The next action we'll see is a push from the gigacaps to mandate a certain percentage of renewables for all their competitors because:
a) the companies above especially the ones with data centers have taken up almost all the hydro capacity meaning almost everyone else will have to go with wind and solar.
b) despite the rapid decrease in the price of solar electricity at the panel level, when you add the cost of storage, batteries or pumped hydro or molten salt or whatever, and the price of inverters to make your leccy compatible with the grid and back-up power for when the sun doesn't shine or the wind doesn't blow and connection costs and I'm sure I'm leaving a half-dozen costs out, but when you add it all up renewable electricity is still more expensive than natural gas fired turbines, despite the conversion losses when using natty.
Which means the bigger companies will have yet another advantage.
Recently:
This is the type of stuff I was writing about in the introduction to December 9's Knowledge@Wharton:: "Why ESG Investors Are Happy to Settle for Lower Returns":
Warning: Because there is a paucity of alt-energy stocks that don't rely on cobalt mined by children in the DRC (for example), certainly not $30 trillion worth, the vast majority of equities touted as ESG by the marketeers are tech stocks.
In part this is because the Google's of the world can claim energy efficiency by talking revenue per kilowatt of electricity used or carbon neutrality because their data centers use hydro-produced electricity or because they don't have smokestacks that some ambush photojournalist can snap pictures of or, whatever.
What this means in practical terms is that when you buy ESG you are buying growth and hypergrowth stocks. Meaning that if there actually is a rotation to value/small cap/other factors etc,. ESG is going to lag, possibly dramatically and ESG investors had better be resigned to underperformance for a long time, and possibly until behaviors are mandated by force of law..
This isn't where the below piece is going but is something that should be top-of-mind any time the subject comes up....
***
All of which means AMZN will be touted as an exemplar of ESG and poured into portfolios while the stock is rangebound since July after the Covid-19 double from the lows:
Øerstad on the other hand seems to drop out of one of the feedreaders every other day
As for the "Ø" see "Oh Oh Norway, You Are Busted".
Index (and ETF and fund) construction: very important
