Investment strategy focuses on the growth potential of hydrogen innovation and technologies in the transition to a low-carbon world
10 Feb 2021
Legal & General Investment Management (LGIM) has today announced the launch of the L&G Hydrogen Economy UCITS ETF, which provides investors with exposure to the long-term investment opportunity offered by the transition to a low-carbon, hydrogen economy. This includes the technologies and firms that are enabling the production of cheaper, clean forms of hydrogen and those that are expected to play an integral role in the hydrogen economy.
It will build on and complement LGIM’s existing suite of sustainable thematic ETFs, such as the L&G Clean Energy UCITS ETF and the L&G Battery Value-Chain UCITS ETF. As policy and economics start to align towards an economy based on sustainable energy, LGIM has launched this strategy to provide investors with a precision tool to add exposure to the hydrogen economy value chain to their clean energy investments. This hydrogen ETF can be used alongside the above funds to allow investors to increase exposure to the clean hydrogen economy alongside their investments in clean energy generation and energy storage.
By employing a dynamic, actively designed investment strategy by LGIM that leverages GlobalData’s unrivalled proprietary database of companies engaged in the hydrogen industry, the ETF will seek to gain exposure to the full hydrogen value chain. This means companies with a minimum market cap of $200 million, including electrolyser manufacturers, hydrogen producers, fuel-cell manufacturers, specialist mobility providers, fuel-cell component suppliers, key industrial and utility companies, and others in the supply chain.
The global drive to cut carbon emissions is progressing and for the hydrogen sector in Europe, policymakers are encouraging these industries to switch to ‘green’ hydrogen produced without fossil fuels, which could reduce up to 830 million tonnes of global CO2 emissions according to IEA. This launch follows growing demand from clients and prospective investors, and aims to capitalise on the combination of low-carbon government policies, technological advances, and cheaper components that is facilitating the growth of the hydrogen economy, which is expected to be worth $2.5 trillion in revenues and $11 trillion in infrastructure potential by 2050.
The strategy is listed on the London Stock Exchange, Deutsche Boerse, Borsa Italiana, Six Swiss Exchange and the NYSE Euronext, and is available to UK and European intermediary and retail investors.
The fund is the latest addition to LGIM’s existing thematic range, taking it to ten specialist funds, covering a number of disruptive technology themes, such as the $2.57 billion L&G Cyber Security UCITS ETF, the $650m L&G Battery Value-Chain UCITS ETF and $1.44 billion L&G ROBO Global Robotics and Automation UCITS ETF. The team hopes to build on recent positive performance across the range, with all LGIM’s thematic ETF strategies outperforming the MSCI World Index in 2020 by at least 35%.
Howie Li, Head of ETFs at LGIM: "Access to clean hydrogen will be key to lowering emissions in harder to abate industries where electrification alone is not enough. The commitments being made to the hydrogen economy by governments and businesses around the world are creating long-term investment opportunities with short-term catalysts. We believe this fund offers investors early access to this fast evolving industry and allows investors the ability to control the amount of hydrogen exposure into their portfolio alongside our clean energy and battery ETFs. As a package, the hydrogen ETF will complement these other two fund to provide investors with the ability to capture growth to be found in clean energy generation and energy storage."
James Crossley, Head of UK Retail Sales at LGIM: "At LGIM, we believe in giving investors targeted, specific exposure to the full value chain of low-carbon solutions across the power production, storage and distribution energy cycles. The launch of the L&G Hydrogen Economy UCITS ETF expands on our market-leading thematic range and underscores our commitment to equipping investors with the portfolio tools they need to gain access to the key themes that will help us transition to a more sustainable world."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which 39% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
*as at HY 2023
Legal & General Investment Management
LGIM is one of Europe’s largest asset managers and a major global investor, with total assets under management of £1.16 trillion1 ($1.47tn, €1.35tn, CHF 1.31tn). We work with a wide range of global clients, including pension schemes, sovereign wealth funds, fund distributors and retail investors.
For more than 50 years, we have built our business through understanding what matters most to our clients and transforming this insight into valuable, accessible investment products and solutions. We provide investment expertise across the full spectrum of asset classes including fixed income, equities, commercial property, and cash. Our capabilities range from index-tracking and active strategies to liquidity management and liability-based risk management solutions.
1 Data as at 30 June 2023. Data combines assets under management by LGIM in the UK, LGIMA in the US and LGIM Asia in Hong Kong.
Assets under management include securities and derivatives positions
*as at HY 2023