On February 10th, I published my assessment of the cleantech ETF space, Not All Cleantech ETFS Are Worth Investing In. I was wrong. Mea culpa again.
First, let’s look at the list of ETFs I assessed. Specifically, let’s assess what the value of an $10,000 investment in them on February 10th would be today.
The average gain for these ETFs was 55%. The best two were over 100% while the worst was 5.9%. The average for the six I declared to be winners by my assessment was 79%.
Meanwhile, how did the Dow Jones do? It’s up 2.9% over the same period. That’s right. The worst performing cleantech ETF did twice as well as the market average. $10,000 invested in an index which tracked the DJI exactly would have been worth $10,290 today.
What about oil and gas? In March I pointed out that COVID-19 Impacting Oil & Gas More Than The Markets As A Whole. How is that sector doing compared to the DJI and cleantech? It’s off 20.5% per the S&P Oil & Gas Exploration & Production Index. $10,000 invested in a fund which exactly matched that sector would have been worth $7,953 today.
Every single cleantech ETF outperformed the Dow Jones Industrial Index by a massive margin, and the gap between $10,000 invested in oil and gas vs the average of the ETFs was $7,500 in gain.
Let’s poke at this a bit more though. After all, this is the year of Tesla entering the S&P 500. $10,000 invested in Tesla on February 10th would be worth $26,918 today. And as much of my personal investment in ETFs was from profit-taking on Tesla, obviously I was wrong there too. To be clear, I’m completely fine with that. I was diversifying to reduce exposure to Tesla and have still done very well with both my remaining Tesla holdings and what I diversified into. But note that as Daniel Kahneman points out in Thinking, Fast and Slow, people almost always do worse on stocks they buy than those they sold. It’s a cognitive bias. It’s quite possible I’m just justifying my failure, as man is the animal that rationalizes.
The losers in February were the transportation ETFs. All of them were heavy on legacy automakers, all of them included Tesla. They average 46% returns since February. Even the worst of the funds in February, First Trust NASDAQ Global Auto Index Fund (CARZ), made 43% this year. However, they all hold Tesla positions as 2.9% to 6.4% of their portfolios, so at least some of their wins are simply riding Tesla. Three of them are based on the Solactive Electric Vehicles and Future Mobility Index, and as usual, it’s outperforming funds based on it substantially, coming in at 59.2% gains. As stated in February, these funds’ devotion to legacy automakers is doing them no favors.