Legal & General Investment Management (LGIM), the tenth-largest investment firm globally, has launched the first hydrogen exchange traded fund (ETF) to provide investors with access to the full hydrogen value chain.

There have been only limited opportunities for investors to gain exposure to the whole hydrogen value chain to date, and no opportunities to invest in low-cost index-tracking funds that attract the majority of new investment flows. HydrogenOne Capital is preparing to launch an actively managed fund that invests in both listed and unlisted assets, but it is too early to invest.

The L&G Hydrogen Economy UCITS ETF will target companies with a minimum market cap of $200mn, 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 commitments being made to the hydrogen economy by governments and businesses around the world are creating long-term investment opportunities with short-term catalysts” Li, LGIM

An ETF is an investment fund that is listed on a stock exchange. It replicates the performance of a chosen benchmark (such as the S&P 500 or a specific industry) but can legally hold a variety of assets, including bonds, stocks and currencies.

The move is part of LGIM’s aim to build on its existing suite of sustainable thematic ETFs. The new fund is the tenth addition to LGIM’s existing thematic range, which includes its clean energy and battery value-chain ETFs. It utilises GlobalData’s database of companies to target exposure to the hydrogen value chain.

Howie Li, head of ETFs at the investment firm, says: “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.”

The fund offers investors “early access” to this fast-evolving industry and allows them to control the amount of hydrogen exposure in their portfolios, he says.

James Crossley, head of UK retail sales at LGIM, adds: “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.”

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Author: Stephen Little