QCLN - QCLN: Speculating With This High Risk High Reward Renewable Electricity ETF

2024-04-01 23:19:31 ET

Summary

• The First Trust NASDAQ Clean Edge Green Energy Fund is a highly speculative Renewable Electricity ETF with the potential for significant gains and losses.
• Lately, QCLN has suffered declines greater than nearly any other U.S. Equity ETF. Investors have seen their 184% return from 2020 cut down to just 42% through Q1 2024.
• QCLN's constituents have a 1.60 five-year beta, and uncertainty in lithium prices and demand for electric vehicles only adds to its speculative nature.
• While the potential for huge gains is attractive, I recommend readers avoid QCLN, as there are too many unknowns. At minimum, it's prudent to sell QCLN after a year of big gains, as it's never delivered positive returns in consecutive years since its inception.

Investment Thesis

The First Trust NASDAQ Clean Edge Green Energy Fund ( QCLN ) is unique. It's one of only a handful of renewable energy ETFs trading on U.S. exchanges. QCLN can also generate enormous gains, such as its 184% total return in 2020. However, it's also capable of doing precisely the opposite. Today, QCLN's constituents are trading about as far from their 52-week high prices than any other U.S. Equity ETF on the market. If you want to be greedy when others are fearful, there's no better time to buy QCLN. ...

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