Inflation Reduction Act Echoes in Carbon Credits ETFs
Carbon Credit ETFs and ETFs adopting a low volatility strategy were among Canada’s top weekly performers.
The only two Canadian carbon credits ETFs reigned over the nation’s top-performing ETFs last week, driven by an earlier passing of the Inflation Reduction Act by the U.S. House of Representatives. Meanwhile, low volatility ETFs secured four slots on the top performing list.
Carbon Credits ETFs Boosted by the Inflation Reduction Act
The Horizons Carbon Credits ETF (CARB) ranked first among the weekly top ETF performers in Canada over the past week. CARB has soared 10.26% during the first week between August 15th and August 19th, followed by the Ninepoint Carbon Credit ETF (CBON) which posted 9.22% weekly gains. Most of the gains were propelled by the U.S. House of Representatives passing a landmark bill, known as the Inflation Reduction Act, during the previous week. The bill is expected to have significant implications and massively affect businesses in renewable energy, potentially reducing the United States’ net carbon emissions by up to 44% by the year 2030, below 2005 levels, according to some industry experts. Over the next decade, the Inflation Reduction Act allocates USD$369 billion to energy security and climate change programs. As a result, manufacturers of solar panels, batteries, wind turbines, and several other companies operating in the renewable energy sector will benefit from tax credits under this bill.
ETFs in play:
Low Volatility ETFs Make it to the Top in Canada
ETFs adopting a low volatility strategy select securities based on the volatility of past returns. It is appropriate to look for these types of ETFs during volatile and swinging markets. Given the recent market activity, select Canadian low volatility ETFs showed strong performance. These ETFs secured four slots on the Canadian weekly top-performing ETFs. The TD Q U.S. Low Volatility ETF (TULV) soared 2.78% for the week while boasting a 6.28% monthly gain. The BMO Low Volatility U.S. Equity ETF (ZLU) went up 2.64% for the week. Similarly, the CIBC Qx U.S. Low Volatility Dividend ETF (CQLU) and the Fidelity U.S. Low Volatility Index ETF (FCUL) traded in the green, having generated 2.52% and 1.94% of gains for the same week.
ETFs in play:
Data for this article is as of August 19th, 2022.
