A sound investment process and strong management team underpin SPDR® Kensho Clean Power ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.  

 The strategy's investment process inspires confidence and earns a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in yield exposure and an overweight in volatility exposure compared with category peers. Low yield exposure is attributed to holding fewer stocks with high dividend or buyback yields -- instead, typically holding companies with a stronger focus on growth opposed to returning capital. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

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Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. SPDR® Kensho Clean Power ETF earns a High Process Pillar rating. The leading factor in the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. Respectable risk-adjusted performance also bolsters the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the process was successful over that period. The parent firm's five-year risk-adjusted success ratio of 58% supports the rating. The measure indicates the percentage of a firm's funds that survived and surpassed their respective category's median Morningstar Risk-Adjusted Return for the period. Their respectable success ratio suggests that this firm does well for investors and that this fund may benefit from that.

The investment strategy as stated in the fund's prospectus is:  The investment seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Kensho Clean Power Index.  Under normal market conditions, the fund generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index is designed to capture companies whose products and services are driving innovation behind clean power. The fund may invest in equity securities that are not included in the index, cash and cash equivalents or money market instruments, and such as repurchase agreements and money market funds. It is non-diversified. 

 The portfolio is overweight in technology and industrials relative to the category average by 32.6 and 27.5 percentage points, respectively. The sectors with low exposure compared to category peers are energy and basic materials, with energy underweighting the average portfolio by 84.7 percentage points of assets and basic materials similar to the average. The strategy owns 51 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 29.3% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 51.9% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 32% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

High

Process

State Street’s team is strong compared with others in the industry, resulting in an Above Average People Pillar rating. There are two managers listed on the fund: Kathleen Morgan, Mark Krivitsky. Together, they manage a total of two strategies, with solid long-term prospects. The strategies average a Silver asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Above Average

People

State Street Global Advisors is under new leadership but continues to move along the positive trajectory established by former leaders. SSGA maintains its Above Average Parent Pillar rating.
Cyrus Taraporevala, who oversaw much of SSGA’s recent transformation, retired from the CEO position in December 2022 and passed the baton to his successor, Yie-Hsin Hung. She inherited a business that’s become more disciplined with its fund lineup. Fees have come down, while product development remains focused on fixed-income and sustainability funds, and many of SSGA’s launches have echoed that intention.
The seeds that SSGA planted over the past several years have been bearing fruit. It built out a low-cost series of portfolio building-block ETFs in the U.S. bearing the “SPDR Portfolio” branding. SSGA launched these later than its industry rivals, so they aren’t as large. But they’re competitive, with solid management and low fees, which helped them consistently take in new money over the past several years.
SSGA continued to overhaul its ETF business in Europe with most of its recent fixed-income and sustainability fund launches. Many of these funds track indexes and charge relatively low fees. With operations in the U.S. and Europe standing on a firm foundation, SSGA will put more focus on its Asia-Pacific business—the smallest regional segment of its business.

Parent

SPDR S&P Kensho Clean Power ETF

CNRG tracks a tier-weighted index of US equities associated with the clean power sector.

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Investors who piled into clean energy themes the last few years are experiencing some performance pain this year, as we appear to be experiencing a detour on the road to the clean energy transition. Related themes have been hard hit this year due to a confluence of events.

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Investors looking to maximize the possibility of positive outcomes when it comes to clean energy equities and the related exchange traded funds may want to consider patience as a virtue. That objective becomes somewhat easier when eschewing stock picking and opting for the breadth offered by ETFs, including the SPDR Kensho Clean Power ETF (CNRG).

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Leading up to the passage of the Inflation Reduction Act, renewable energy and clean technology stocks and exchange traded funds rallied. However, that scenario rapidly reversed as the broader complex of growth stocks again slumped, taking ETFs such as the SPDR Kensho Clean Power ETF (CNRG) along for the ride.

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