In First Engagement with Solactive, Strive Asset Management Launches ETF Tracking Solactive United States Energy Regulated Capped Index
Global energy demand is forecasted to increase 47% by 2050, according to the US Energy Information Administration (EIA), with power consumption expected to triple by 2050, as electrification and living standards grow. As the demand for energy sources continues to rise and with energy prices expected to increase, Solactive is pleased to announce that Strive Asset Management launched a new exchange-traded fund (ETF) with ETF Architect as the sponsor. The Strive U.S. Energy ETF seeks to track the Solactive United States Energy Regulated Capped Index and offers investors exposure to US companies and US listed securities within both traditional and renewable energy industries. The Strive U.S. Energy ETF started trading on August 9th 2022, under the stock code DRLL on the New York Stock Exchange (NYSE).
The Solactive United States Energy Regulated Capped Index aims to represent securities across energy-related industries among the largest 1,000 companies in the United States stock market. The starting universe of the index is the Solactive GBS United States 1000 Index, which is then filtered for energy-related companies. The weighting of the securities is based on their free float market capitalization with a capping scheme that is compliant with the Regulated Investment Company (RIC) concentration framework, with the addition of small buffers. According to that, a single issuer cannot exceed 22.5%, and all the issuers with a weight above 4.5% cannot make up for more than 45% of the index weight.
In particular, the index incorporates securities that belong to a wide range of industries, such as crude petroleum and natural gas extraction, bituminous coal and lignite surface mining, and hydroelectric, nuclear, solar, and wind electric power generation, among others.
Timo Pfeiffer, Chief Markets Officer of Solactive, comments: “As the world economy needs energy on a constant and growing basis, this is one of the most important industries, with global high demand. The increasing prices of traditional energy sources and the rising search for alternative ones make it an interesting industry. We are delighted that Strive Asset Management and ETF Architect chose us to launch this product and provide investors with the opportunity within one of the major sectors of the economy.”
Matt Cole, Head of Product and Investments at Strive, states: “DRLL, a passively managed ETF that provides exposure to the US energy sector, couldn’t come at a better time. For the past several years, fundamental factors such as quantitative easing, record low interest rates, pandemic lockdowns, and remote work were supportive of the technology industry. Today, those tailwinds have all reversed and current tailwinds such as rising interest rates and inflation, and a 37-year low in the US strategic petroleum reserve favor the US energy sector. We believe the US energy sector was constrained more than any other sector by the rise of Environmental, Social, and Governance (ESG) investing. Strive’s mandate to US energy companies will be simple: focus exclusively on financially measurable return on investment, without regard to any other social, political, cultural, or environmental goals. We believe there is significant value to unlock in the US energy sector, and unlocking that value runs through DRLL.”