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A New ETF (ILIT) Hits the Market to Bet Big on Lithium Rush
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Lithium has emerged as a key metal in today’s world due to its usage in electric vehicles (EVs) and renewable energy storage systems. As the global transition towards sustainable energy gathers steam, lithium's role in enabling this shift has made it one of the most coveted commodities.
This is why, BlackRock recently launched iShares Lithium Miners and Producers ETF (ILIT). Let’s delve a little deeper.
Inside ILIT
The fund hits the market on Jun 21, 2023. It looks to track the investment results of an index composed of U.S. and non-U.S. equities of companies primarily engaged in lithium ore mining and/or lithium compounds manufacturing.
The 39-stock fund charges 47 bps in fees. The fund holds 20.63% of its assets in the form of short-term assets and cash. No stock takes more than 8.50% of the fund. Liontown Resources Ltd, Pilbara Minerals Ltd and Allkem Ltd hold the top three spots in the fund.
How Does It Fit in a Portfolio?
Due to high-density energy storage, the metal is used in rechargeable batteries for electric cars, smartphones, laptops, and other electronic devices. EVs and battery storage have already replaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040, per IEA (read: Play the Emergence of Lithium With These ETFs).
While the demand for lithium continues to surge, supply constraints pose threats to fulfil the growing needs. The production of lithium is concentrated in a few countriesChina, Australia and Chile are the primary lithium producers, with China making up an 80% market share in lithium-ion batteries.
Tesla's plan to construct a $375 million lithium refinery in Texas explains the need for safeguarding the supply chain and establishing independence in North America's lithium refining sector by 2025. Climate provisions in the Inflation Reduction Act also reinforces the need for lithium.
Investors should note that the extraction of lithium involves environmental considerations. As a result, the supply-demand imbalance is likely to drive lithium prices higher, creating an attractive investment opportunity in lithium equities.
These companies offer exposure to a sector that is expected to witness robust growth in the coming years. By investing in lithium mining companies, battery manufacturers, or even EV manufacturers, investors can diversify their portfolios.
Any Competition?
The new fund faces competition from a few existing products. These are Global X Lithium & Battery Tech ETF (LIT - Free Report) , and Amplify Lithium & Battery Technology ETF (BATT - Free Report) .
The fund LIT tracks the performance of the largest and most-liquid listed companies that are active in the exploration and mining of Lithium, or the production of Lithium batteries. LIT charges 75 bps in fees.
And the fund BATT seeks to provide exposure to global companies deriving material revenues associated with the development, production and use of lithium battery technology. BATT charges 59 bps in fees.
We can see that the newbie charges lesser than the above-said products. This feature will help ILIT to make a killing.
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A New ETF (ILIT) Hits the Market to Bet Big on Lithium Rush
Lithium has emerged as a key metal in today’s world due to its usage in electric vehicles (EVs) and renewable energy storage systems. As the global transition towards sustainable energy gathers steam, lithium's role in enabling this shift has made it one of the most coveted commodities.
This is why, BlackRock recently launched iShares Lithium Miners and Producers ETF (ILIT). Let’s delve a little deeper.
Inside ILIT
The fund hits the market on Jun 21, 2023. It looks to track the investment results of an index composed of U.S. and non-U.S. equities of companies primarily engaged in lithium ore mining and/or lithium compounds manufacturing.
The 39-stock fund charges 47 bps in fees. The fund holds 20.63% of its assets in the form of short-term assets and cash. No stock takes more than 8.50% of the fund. Liontown Resources Ltd, Pilbara Minerals Ltd and Allkem Ltd hold the top three spots in the fund.
How Does It Fit in a Portfolio?
Due to high-density energy storage, the metal is used in rechargeable batteries for electric cars, smartphones, laptops, and other electronic devices. EVs and battery storage have already replaced consumer electronics to become the largest consumer of lithium and are set to take over from stainless steel as the largest end user of nickel by 2040, per IEA (read: Play the Emergence of Lithium With These ETFs).
While the demand for lithium continues to surge, supply constraints pose threats to fulfil the growing needs. The production of lithium is concentrated in a few countriesChina, Australia and Chile are the primary lithium producers, with China making up an 80% market share in lithium-ion batteries.
Tesla's plan to construct a $375 million lithium refinery in Texas explains the need for safeguarding the supply chain and establishing independence in North America's lithium refining sector by 2025. Climate provisions in the Inflation Reduction Act also reinforces the need for lithium.
Investors should note that the extraction of lithium involves environmental considerations. As a result, the supply-demand imbalance is likely to drive lithium prices higher, creating an attractive investment opportunity in lithium equities.
These companies offer exposure to a sector that is expected to witness robust growth in the coming years. By investing in lithium mining companies, battery manufacturers, or even EV manufacturers, investors can diversify their portfolios.
Any Competition?
The new fund faces competition from a few existing products. These are Global X Lithium & Battery Tech ETF (LIT - Free Report) , and Amplify Lithium & Battery Technology ETF (BATT - Free Report) .
The fund LIT tracks the performance of the largest and most-liquid listed companies that are active in the exploration and mining of Lithium, or the production of Lithium batteries. LIT charges 75 bps in fees.
And the fund BATT seeks to provide exposure to global companies deriving material revenues associated with the development, production and use of lithium battery technology. BATT charges 59 bps in fees.
We can see that the newbie charges lesser than the above-said products. This feature will help ILIT to make a killing.