Cleantech Group prunes its industry index

The Cleantech Group's Cleantech Indices division has made a significant revision to its Cleantech Index™ (ticker CTIUS).

The revision was driven by D. Rafael Coven, recently named Managing Partner of Cleantech Indices.

The changes occurred during the index’s quarterly rebalancing on March 30, 2007.

“Although CTIUS has performed well since its inception, we believe the revision will greatly improve the index’s ability to reflect the economic growth from the rising global demand and use of clean technology products & services. While this type of revision is a one-time event, we are confident that investors and other index users will be pleased with the changes,” said Coven.

As part of the revision, Coven has implemented rules addressing component weighting, liquidity and diversification intended to limit unnecessary volatility, to help the index track sector fundamentals better and to make for less speculative ETFs that are better suited for long-term investors, the company said.

The index has narrowed its focus to 45 component companies that Coven believes best showcase global success and growth potential from the development and commercial use of clean technologies.

At least 50% of a company’s sales or operating profits must be from cleantech businesses just to be considered for the index.

“The Index may now have significantly fewer companies, but overall they are of much higher quality,” said Coven.

Coven has worked with leading cleantech firms such as Abengoa, Dynatech, Philips Lighting, Siemens and numerous private equity and venture capital investors. In the 1990s, Coven was an international equity analyst at Dietche & Field Advisors where he evaluated, made and managed a US $700 million segment of the firm’s $5.6 billion equity portfolio (including many cleantech companies) as part of the portfolio management team. He holds a B.A in Developmental Economics from the University of Michigan and an MBA from Northwestern University’s Kellogg School.

The Cleantech Index was first published on the American Stock Exchange in February 2006.

The changes are also being reflected in the exchange-traded funds (ETFs) based upon the Cleantech Index: the PowerShares Cleantech Portfolio (AMEX ticker: PZD) and the KSM Cleantech ETF (Bloomberg ticker: KSMCLNT) in Israel.

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