ProShares S&P Kensho Cleantech ETF (CTEX)

What is CTEX and what does it hold?

ProShares S&P Kensho Cleantech ETF (NASDAQ: CTEX) is a thematic fund that holds US-listed companies involved in clean energy and environmental technology. Rather than following a traditional industry classification, the fund uses an algorithm developed by Kensho Technologies to identify companies engaged in renewable energy, energy efficiency, green infrastructure, and related environmental solutions. The portfolio includes large, established clean-energy firms alongside smaller specialised companies building new technologies.

The “Kensho” part refers to the AI-driven screening process that selects holdings. Kensho scans corporate disclosures, product descriptions, and industry data to classify companies by their exposure to cleantech themes — a more granular approach than assigning everyone to a sector bucket. This can capture a renewable-energy components supplier that is buried in an industrials index or a materials company that is central to battery technology.

Why own a cleantech-focused fund?

Investors buy thematic ETFs like CTEX for several reasons. Some have genuine conviction that clean energy is the future and want portfolio exposure to that trend. Others use it as a satellite position to supplement traditional stock holdings — a way to amplify a bullish view without buying individual stocks. Still others hold it for environmental, social, and governance reasons, preferring to own companies whose work aligns with their values.

The counterargument is that cleantech is a crowded bet. Trillions of dollars of capital have flowed into renewables and climate technology, which has driven valuations high and created competition. A fund that buys the entire cleantech universe pays for both the winners and the losers in that sector; a passive index approach is cheaper, but you bear the risk that the sector underperforms.

How does it track the index and what does it cost?

CTEX aims to track the S&P Kensho Cleantech Index, which is constructed and maintained by S&P Global. The index is reconstituted regularly, meaning stocks are added and removed based on their cleantech classification. The fund holds roughly 50 to 100 stocks, depending on the index composition.

Expense ratio is moderate for a thematic fund — typically in the region of 70 to 90 basis points — which is cheaper than an actively managed cleantech fund but higher than a broad market index. That difference reflects the cost of the proprietary indexing process and the active rebalancing required to maintain thematic focus.

What are the real risks?

Thematic concentration is the first. The portfolio is tilted toward companies in specific industries and geographies — heavy on renewable-energy manufacturers, battery technology, and grid modernisation, light on sectors that do not cleanly fit the cleantech label. A prolonged downturn in renewable energy or a shift in government energy policy can hit the fund sharply.

Valuation is the second risk. Growth and cleantech stocks have historically commanded high price-to-earnings multiples because investors expect rapid growth. If growth disappoints or if interest rates rise and discount future profits more harshly, valuations can contract rapidly, and the fund can underperform.

The third is that the algorithm, though sophisticated, is not perfect. Kensho’s classification may catch companies that dabble in cleantech without it being their core business, or it may miss legitimate players because of how they describe themselves. The index is a black box to some degree — the exact methodology is proprietary — so investors cannot fully audit what they are buying.

Liquidity is generally strong because the fund holds household-name companies alongside smaller specialised firms, and CTEX trades with reasonable spreads on NASDAQ.

How to research it

Obtain the prospectus and fact sheet from ProShares and review the Kensho Index methodology. The S&P Global website details how companies are scored and classified into the cleantech universe.

Download the full holdings list and scan it: do the companies included match your understanding of the cleantech sector? Are there surprises? This helps you calibrate whether the algorithmic screening aligns with how you think about the theme.

Study the sector and geographic breakdown — is the fund overweight solar manufacturers, electric vehicles, or something else? Does that tilt match your view of which cleantech segments will outperform?

Finally, compare CTEX’s one-, three-, and five-year returns to the S&P 500 and to other cleantech ETFs (if available). Thematic funds can outperform broadly during hot years for their theme but lag in years when the market favours other sectors. Understand whether the fund’s performance history justifies its expense ratio and whether you are comfortable with the concentration risk.