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Pickens Oil ETF is Making An Alternative Energy Move

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The NYSE Pickens Oil Response ETF (NYSEArca: BOON), launched a year and a half ago by TriLine Index Solutions, an affiliate of BP Capital Fund Advisors, legendary oil tycoon T. Boone Pickens’ hedge fund, is doing something previously unthinkable: it’s moving away from some traditional oil stocks to embrace alternative energy fare.

The NYSE Pickens Oil Response ETF will try to reflect the performance of the NYSE Pickens Oil Response Index, which tracks companies that are positively correlated with changes in the price of ICE Brent Crude Oil Futures, according to a prospectus sheet. The indexing methodology hopes to provide broader exposure to energy-intensive industries, compared to traditional “energy” indices. BOON is even getting a new ticker to reflects its clean energy status.

“The revamped ETF, which will trade as RENW, is based on an index of companies that derive ‘significant revenue’ from renewables or meet a large portion of their energy needs from renewable sources,” reports Bloomberg. “BP Capital isn’t totally giving up on petroleum — the firm will continue to offer a pipeline ETF, for example.”

As of July 29, BOON had $3.2 million in assets under management.

Good Timing?

The decision to reconfigure BOON into a renewable energy ETF comes at a time when fossil fuel stocks are struggling and alternative energy names are soaring. In fact, some of this year’s best-performing non-leveraged ETFs are alternative energy funds. Renewables’ share of power generation is also increasing.

“Renewable’s power generation share was at 23.2%, up from 18.8% in March and 22.1% a year ago,” according to S&P Global. “It was the first time ever that power generation from renewables were higher than coal in a month. Wind generation was at a record-high 30.22 TWh in April, up 16.1% month on month and 12.9% higher than a year ago. April is typically the windiest month of the year, with an average of 23.34 TWh generated in April since 2014.”

Bolstering the case for renewables are declining costs and plunging consumption of coal.

“BP Capital, a spinoff of Pickens’ shuttered hedge fund, launched the oil ETF just last year, offering investors exposure to companies that benefited from a rise in global crude prices. Brent oil futures are down about 15% in the last year while BP Capital’s ETF, which trades under the ticker BOON, is down almost 20%,” according to Bloomberg.

For more information on the renewables space, visit our renewable energy category.

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