Global X, the fund manager best known for its emerging markets funds, is carving a new niche today by launching the first ETF to tap in to the renewable energy theme through lithium companies.
The Global X Lithium (NYSEArca: LIT) is the first of a kind and will invest both in lithium miners as well as in lithium battery makers.
“Of the other ETFs that have a renewable energy play, there are few, if any, that get at the movement from the raw, critical resource level like the way this lithium ETF does,” Global X Funds CEO Bruno del Alma told IndexUniverse.
LIT does that by capturing the “high-tech component” to lithium by investing in the largest and most liquid companies that not only mine lithium but that also manufacture lithium batteries, where a lot of the added value is found, he said.
At launch, LIT’s basket was split nearly 50-50 between miners and producers in seven different countries. The fund, which will track the Solactive Global Lithium Index, comes with an annual expense ratio of 0.75 percent.
‘A Critical Resource’
“There is a huge movement for renewable energy, and lithium is a critical resource in that movement,” del Alma added.
The metal, which is widely used in batteries for cell phones and laptop computers, holds the key to the booming electric car industry. The GM Volt, the Nissan Leaf and the Tesla Roadster are among some of the new vehicles making their way onto the market that rely on lithium-ion batteries.
What’s more, up to now, investors had no way to access the lithium market because the metal is not traded on any commodities exchange around the world.
“We’ve had a large number of inquiries about this product, even months before launch, coming from some of the largest and most sophisticated hedge funds and asset managers out there,” del Alma said, adding, “This will be an ETF led by heavy institutional interest and it could easily become our flagship fund this year.”
LIT will join a roster of a dozen other Global X ETFs, most of which invest in emerging markets.
Two new China ETFs with a different approach have bright futures.
Making the most of an Ed Yardeni call on manufacturing with index funds.
WisdomTree's new currency-hedged Japan ETFs target sectors.
An MSCI-Barclays combo would create a mega-brand in indexing.