Why has the ETFs Hydrogen ETF (ASX:HGEN) leapt almost 20% in a month?

This hydrogen ETF is giving investors some impressive gains…

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It’s now been more than a month since we welcomed the ETFS Hydrogen ETF (ASX: HGEN) to the ASX boards. One of the newest exchange-traded funds (ETFs) on the market, HGEN had quite an explosive ASX debut. Last month, we first covered how HGEN was up 12% from its floating price after just two weeks, and then we looked at why this ETF had jumped 18% in just a couple of days.

It seems time has not yet got the better of HGEN either. As it stands today, HGEN units are currently trading at a unit price of $13.23, down a nasty 2.86% so far today. Even so, this price means HGEN is now more than 30% above the price it was when it first hit the ASX boards (just over $10 a unit). It also means HGEN is up close to 20% over just the past month. Needless to say, the good times just seem to keep on rolling with this hydrogen ETF.

So why has this ETF enjoyed such a strong opening to life on the ASX?

HGEN ETF fires on all cylinders

Well, to answer that, let’s take a look at some of HGEN’s major holdings. Like all sharemarket-based ETFs, HGEN holds an underlying portfolio of shares. In this ETF’s case, these shares are chosen to offer investors “exposure to the world’s leading hydrogen companies, with a focus on pure-plays”.

As it stands today (well, as of 31 October), HGEN’s top 5 holdings are as follows:

  1. Plug Power Inc (NASDAQ: PLUG) with a portfolio weighting of 11.3%
  2. Bloom Energy Corp (NYSE: BE) with a portfolio weighting of 9.9%
  3. Ballard Power Systems Inc (NYSE: BLDP) with a portfolio weighting of 9.6%
  4. ITM Power plc (LON: ITM) with a weighting of 8.1%
  5. Ceres Power Holdings plc (LON: CWR) with a weighting of 7.1%

So let’s check out how these shares have performed over the past month – which will give us some idea as to why HGEN has performed so admirably as well.

So HGEN’s largest holding in Plug Power has enjoyed an exceptional month of returns, rising 28.3% over the past 4 weeks or so.

But that pales against Bloom Energy. Bloom shares have risen almost 43% over the same period.

Ballard Power Systems has given a far more muted performance, ‘only’ rising by 12.15% over the same period. Ditto with ITM Power which is up by around 10.4%.

And, finally, Ceres Power isn’t straying too far from those returns either, rising 9.25% since 18 October.

So we can see that HGEN’s stellar returns over the past month have been powered by (apologies) its primary positions in Plug Power and Bloom Energy.

With the month this ETF has enjoyed, I’m sure HGEN’s investors can’t wait for the next one to roll around.

Should you invest $1,000 in HGEN right now?

Before you consider HGEN, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and HGEN wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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