About NEX – The WilderHill New Energy Global Innovation Index

The WilderHill New Energy Global Innovation Index (NEX) captures solutions to climate change worldwide, and is comprised of companies mostly outside the U.S. whose innovative technologies and services focus on generation and use of clean energy, lower CO2-renewables, conservation and efficiency. These are companies relevant to solving climate change, whose technologies help reduce emissions relative to traditional fossil fuel use. Since 2006, it has been the first and best-known Index for this theme.

We subscribe to academic modern portfolio theory, and believe that for NEX the advantages of an indexing approach are persuasive. We pursue ‘intelligent-indexing’ and analysis-based selection of stocks and sector weightings, which are reviewed according to both qualitative & quantitative methodology. We normally don’t change Index composition more often than at Quarterly Index rebalancing. This is a passive basket. Thus an aim is to capture this evolving, emerging theme even as it may at times expand or contract. We don’t try to ‘beat the market’ — nor try to pick ‘under-valued’ stocks.

We don’t take defensive positions in the Index when markets decline, appear over-valued, or when NEX is experiencing unusually-strong volatility. Rather than select components worldwide on financial or market data alone, we robustly review clean energy broadly conceived, and consider stocks & sectors on technological, environmental, and their relevance-to-the-sector criteria such as preventing pollution and decarbonization. We judge our performance by how well the passive Index tracks movements of global new energy innovation — down and upwards — and thus we anticipate very significant ongoing volatility and change in this sector.

For more on antecedents to the WilderHill New Energy Global Innovation Index (NEX), see the Hydrogen Fuel Cell Institute (www.h2fuelcells.org), early Hydrogen Fuel Cell Index, 1999-2007, and the Clean Energy Index^® (ECO) live since 2004. Since creating the global clean energy index (NEX) in 2006, there’s now also the WilderHill Hydrogen Economy Index (H2X) and the WilderHill Wind Energy Index (WNX). Our emphasis is on green thinking, climate solutions, decarbonization & innovative approaches that make ecological and economic sense.

In the past decade and especially since the Kyoto Protocol, clean energy has seen significant growth outside the United States, with considerable activity now occurring in Europe, the Asia-Pacific region, and elsewhere. Thus to adequately reflect the worldwide nature of the emerging lower-carbon sector, in general at least half the companies comprising the WilderHill New Energy Global Innovation Index are listed on exchanges outside the United States.

The Index is mainly comprised of companies such as in solar and wind power, other renewable energy businesses such as biomass & biofuels, hydro, geothermal, marine etc; also importantly in energy storage, in emerging new energy innovation including electric vehicles, hydrogen, and fuel cells, and decarbonization broadly conceived. It importantly can include companies targeting step-change or greater improvements in generation, distribution and energy conversion and use, as well as conservation, efficiency, materials in emerging energy innovation themes, and in associated services. It is a dynamic Index that reflects change.

The global Index is expected to be a diversification tool. Given the volatility of the new energy sector worldwide and since most NEX companies are on exchanges outside the U.S., the Index is expected to be volatile as well.