Back when I bought the VanEck Vectors Low Carbon Energy ETF (SMOG) for my Jubak Picks Portfolio on January 7, 2021, it looked like this ETF’s overweighting in shares of Tesla (TSLA) would be an advantage. After all, the shares of the maker of the world’s leading brand of electric cars had trounced the indexes in 2020.
But 2021 has turned out to be a very different year for Tesla with market share losses in China amidst auto-industry-wide production problems caused by a shortage of semiconductors for cars.
Shares of Tesla were down 14.25% for 2021 to date as of June 2. That’s consequential since Tesla makes up 7.5% of the portfolio at the Low Carbon Energy ETF.
Another electric car maker, Nio (NIO), down 15.55% for 2021 makes up another 5.63% of the ETF portfolio.
I don’t think 2021 is going to be an especially good year for Tesla and it will be tough across the auto industry.
That means, if I’m right, that this ETF’s heavy exposure to Tesla (and to Nio) is going to be a drag on what I see as a likely recovery in the wind power stocks Iberdrola, Orsted, and Vestas Wind Systems that all are top 10 portfolio holdings in the ETF.
I’d rather play any wind power rally through these stocks–I own Orsted (DNNGY) and Vestas (VWDRY) in my Jubak Picks Portfolio–than though this ETF with its drag from Tesla in 2021.
I will sell the VanEck Vectors Low Carbon Energy ETF out of my Jubak Picks Portfolio tomorrow June 3, with a 16.04% loss since I established the position on January 7, 2021.