5 ETFs Likely to Gain from Inflation Reduction Act
TL/DR –
The Inflation Reduction Act of 2022, which provides $370 billion to combat climate change, could boost several Exchange Traded Funds (ETFs) according to Jon Maier, Chief Investment Officer at Global X. This includes the Global X Lithium & Battery Tech ETF (LIT) which invests in the electric vehicle (EV), renewable energy storage, and mobile device industries, the Global X Uranium ETF (URA) which invests in uranium mining and nuclear components companies, and the Global X CleanTech ETF (CTEC) which invests in companies developing technologies that reduce negative environmental impacts. Other potentially boosted ETFs include the Global X Renewable Energy Producers ETF (RNRG) which invests in renewable energy companies, and the Global X Solar ETF (RAYS) which focuses on solar energy companies.
Understanding the Impact of Inflation Reduction Act on ETFs
The Inflation Reduction Act of 2022, signed into law by President Biden, offers new opportunities for specific ETFs to thrive. The act has provided $370 billion to combat climate change, making it the largest climate spending package in US history. This includes tax credits for wind, solar, hydrogen, and nuclear energy, and battery storage.
One beneficiary of this law is the Global X Lithium & Battery Tech ETF (LIT), which caters to the growing demand for lithium in the electric vehicle (EV), renewable energy storage, and mobile device industries. Top holdings include Albemarle ALB and Tesla TSLA.
The transition towards carbon neutrality and less dependence on Russian fossil fuels has also increased prominence for nuclear power. Global X Uranium ETF (URA) invests in uranium mining and nuclear component companies.
Furthermore, Global X Renewable Energy Producers ETF (RNRG) invests in companies that generate energy from renewable sources. The Global X Solar ETF (RAYS) and Global X CleanTech ETF (CTEC) focus on solar energy companies and environmentally-friendly tech development, respectively.
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