Clean-Energy Stock Mania Has Only Itself to Blame

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A massively popular clean-energy index is a prime candidate for distorting its corner of the market. But it doesn’t, writes jmackin2

In the intense debate about how much index investing distorts the market, one index looks like a prime candidate: the S&P Global Clean Energy index. It is badly designed and has far too much money chasing its 30 holdings, many of which are small and hard to trade.

Money has poured into two iShares ETFs that track the index. Combined with the gains for the stocks they hold, the funds quintupled in value over roughly five months to $14.2 billion at their January peak, before falling back to about $10 billion.

 

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