Model Portfolio Description
This universe currently consists of 26 Exchange Traded Funds (ETFs) which encompass over 1200 companies involved in green, clean, and sustainable business ventures on a global scale.
Our model is systematic and rules-based. On a monthly basis we sort and rank all the ETFs in this universe on a relative strength basis, and initially created the model portfolio by equally weighting the top 5 choices. This relative strength comparison allows us to determine which ETFs have the greatest likelihood of outperforming the others. This process is repeated each month and any ETF that drops out of the top 10 will be replaced (not always rebalancing the whole portfolio) by the next best choice not already in the portfolio. If there are redundant ETFs in the 5 – for example two solar energy ETFs – then only the top scoring one will be included in the model at any one time. It is our intent to stay fully invested at all times, therefore caution should be exercised if considering this model portfolio as a complete and diversified asset allocation.
Examples of the ETFs considered
Market Vectors Solar Energy (KWT)
The Solar Energy ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Ardour Solar Energy IndexSM, the pure-play leader in tracking the global solar industry. The Index provides exposure to publicly traded companies from around the world that derive at least 66% of their revenues from solar energy. On a weighted basis, the index constituents derive in excess of 90% of their revenues from solar energy. As such, the Fund is subject to the risks of investing in this sector. Source: Van Eck
First Trust ISE Water Index Fund (FIW)
The First Trust ISE Water Index Fund is an exchange-traded fund whose investment objective is to seek investment results that correspond generally to the price and yield, before fees and expenses, of an equity index called the ISE Water Index™. The Index is a modified market portion of their revenues from the potable and wastewater industry. The Index begins by establishing the total population of stocks in the potable and wastewater industry and eliminates stocks which do not meet the Index’s baseline eligibility requirements. To meet Index eligibility, a stock must satisfy market capitalization, liquidity and weighting concentration requirements. The Index selects the top 36 stocks in the industry by market capitalization. The Index is rebalanced on the application of the above model on a semi-annual basis.
Source: First Trust