Best Lithium ETFs to Watch for 2024
Lithium is the chief component of lithium-ion batteries, which power phones and electric cars. This article explains lithium ETFs, their pros and cons, and provides a list of some of the best lithium ETFs to watch.
Table of Contents
What are Lithium ETFs?
Lithium is a silvery-white alkali metal used to build lithium-ion batteries. These batteries are currently the most advanced type of battery, and no other type can store more electricity in the same physical space. Lithium is mined and collected from rock mines and salt lakes.
As the world transitions away from fossil fuels into renewable energy sources like solar and wind, methods of storing electricity like the lithium-ion battery are becoming increasingly important. Furthermore, electric vehicles and computer devices also use lithium-ion batteries, and the demand for these devices is only increasing.
Lithium production was projected to reach 170,200 MT in 2023, marking a 31.2% rise over the prior year. In the end, around 180,000 MT of lithium was produced. Australia was the largest producer, with 73,200 MT to 86,000 MT, followed by China with 22,600 MT to 33,000 MT.
An Exchange-Traded Fund (ETF) is a fund that invests in different equities that track a particular theme, sector and country. A lithium ETF invests in companies throughout the lithium supply chain, from mining to refining and battery production.
Best Lithium ETFs to Watch
It should be noted that there is no hard answer to what is the best lithium ETF. There are many different ETFs on the market, all with a slightly different focus. Investors should use the list as a starting point for their own research before they commit to any investment decisions.
- Global X Lithium & Battery Tech ETF – Fund that Invests into the Full Lithium Cycle
- Amplify Lithium & Battery Technology ETF – Invests into Lithium and Lithium Battery Production
- ARK Autonomous Technology & Robotics ETF – Focuses on Disruptive Technology, Robotics, and AI
Global X Lithium & Battery Tech ETF
The Global X Lithium & Battery Tech ETF invests in companies that are in the complete lithium cycle. This fund aims to emulate the performance of the Solactive Global Lithium Index, which is maintained by Solactive and tracks the largest and most liquid companies active in the exploration and/or mining of lithium or the production of lithium batteries. Companies that refine lithium are also eligible to be included. In practice, companies tend to do refining as well as mining.
The Global X Lithium & Battery Tech ETF invests in 40 companies. The 10 largest holdings are in order: Albemarle Corp (9.3%), TDK Corp (~6.4%), Naura Tech GR -A (~5.9%), Pilbara Minerals LTD (~5.2%), Mineral Resources LTD (~5.1%), Panasonic Holdings Corp (~4.4%), Quimica Y-SP ADR (~4.4%), Tianqi Lithium Corp-A (~4.3%), Contemporary A-A (~4.1%), and LG Energy Solution (~4.1%).
The economic sectors represented by the equities in the Global X Lithium & Battery Tech ETF are mainly materials (~49%), information technology (~19%), industrials (~18%), and consumer discretionary goods (~13%). Energy makes up the last roughly 2%.
With Admirals, you can trade the Global X Lithium & Battery Tech ETF CFD. CFDs, or contracts for difference, allow you to trade long and short a derivative of the underlying market. Learn more in the How to Trade CFDs article.
Amplify Lithium & Battery Technology ETF
The Amplify Lithium & Battery Technology ETF aims to offer investors exposure to a portfolio of companies generating significant revenue from the production and use of lithium battery technology. This includes companies that develop and produce batteries, mine and refine lithium and other metals and materials necessary for batteries, and build electric vehicles. This fund tracks the EQM Lithium & Battery Technology Index.
The top 10 largest holdings of the Amplify Lithium & Battery Technology ETF are the following companies, in order: Contemporary Amperex (~6.6%), BHP Group Ltd (~6.3%), Tesla Inc (~6.1%), LG Energy Solution Ltd (~5.3%), Glencore PLC (~4.7%), BYD Co Ltd (~4.7%), Li Auto Inc (~2.5%), Panasonic Holdings Corp (~2.2%), NAURA Technology Group Co Ltd (~2.1%), and Samsung SDI Co Ltd (~2.1%).
The main economic sectors represented within the Amplify Lithium & Battery Technology ETF are in order: materials, specifically manganese, cobalt, and nickel (~37%); battery technology (~23%); and battery components (~20%).
ARK Autonomous Technology & Robotics ETF
The ARK Autonomous Technology & Robotics ETF is an actively managed fund that aims to provide long-term capital growth for investors by investing in autonomous technology and robotics companies within and outside the United States. The fund aims to keep at least 80% of its capital in assets, but its managers will shift the weights of its cash or bond positions if they suspect market downturns.
The companies eligible to be included in the ARK Autonomous Technology & Robotics ETF derive revenue from new products or services related to energy, automation and manufacturing, materials, artificial intelligence, and transportation. These companies can develop or provide for automation and robotics, 3D printing, energy storage, and even space exploration.
The 10 largest capital positions in the ARK Autonomous Technology & Robotics ETF are in order: Tesla Inc (~9.7%), Kratos Defense & Security (~8.8%), UIPath Inc Class A (~8.7%), Trimble Inc (~8.4%), Teradyne Inc (~7.4%), Aerovironment Inc (~5.7%), Iridium Communications Inc (~5.6%), Komatsu Ltd -Spons ADR (~3.9%), Archer Aviation Inc -A (~3.4%), and Deere & Co (~3.3%).
The main economic sectors the ARK Autonomous Technology & Robotics ETF invests in are information technology (~38%), industrials (~36%), and discretionary consumer goods (~15%). Communications services (~9%), energy (~1%), and health care (~1%) account for most of the fund’s capital.
How to Invest in Lithium ETFs
With Admirals, you can trade and invest in lithium stocks and global ETFs from all around the world, with the following commissions:
- UK stocks and ETFs – 0.1% of trade value, 1 GBP minimum commission.
- US stocks and ETFs – From $0.02 per share, 1 USD minimum commission.
- France/Germany stocks and ETFs - 0.1% of trade value, 1 EUR minimum commission.
You can learn more about trading and investing commissions on the Admirals Contract Specification page. You can search for global stocks and ETFs from the MT5 web platform and invest in four steps:
- Open an account with Admirals.
- Click on Trade on one of your live or demo trading accounts to open the web platform.
- Search for your symbol at the top of the search window.
- Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Conclusion: Pros & Cons of Lithium ETFs
In terms of advantages, investing in the best lithium ETF can offer investors exposure to companies at the forefront of many technological developments in robotics, automation, AI, computing, and autonomous vehicles. If AI continues to improve and the necessary advancements in robotics occur, much labour could be automated. Lithium-ion batteries, and thus lithium, will be necessary to power these developments.
The second advantage of investing in the best lithium ETF is the potential for diversification into the energy sector, mainly in renewable energies. Solar and wind energy production are on the rise and are expected to take more market share as the world shifts away from fossil fuels. All that electricity must be stored somewhere; other energy storage solutions like water reservoirs or hydrogen are not always practical. All this could mean that demand for lithium-ion batteries will continue and grow in the coming decades.
Regarding disadvantages, companies in the renewable energy, automation, and electric vehicle industries face intense competition. New companies and startups are wasting no time trying to capture some future market share of lithium-related technologies, whether mobile devices, electric cars, or energy storage solutions. This fierce competition could lead to a number of these lithium-related businesses going bankrupt in the coming years.
A second disadvantage of investing in the best lithium ETF is the associated risk, mainly geopolitical and technological disruption risks. The geopolitical risk associated with lithium ETF comes from the fact that most lithium is mined in China, Australia, and Chile. Should a natural disaster or political instability happen in one or more of these countries, a disproportionately large part of the lithium industry could be affected. The technological risk associated with investing in lithium ETFs stems from the possibility of some new type of battery being discovered that might not use lithium, meaning demand would fall.
And, as with any form of investment, there is always the risk of loss - especially in newer, unestablished sectors or themes.
Continue Reading:
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- Best NASDAQ ETF
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- What Are ETFs? ETFs Explained
- How to Trade ETFs with €1000
- The CFD Trading Guide
FAQs on Best Lithium ETFs
Is Lithium ETF a good investment?
One of the primary uses of lithium is the lithium-ion battery, the best battery technology currently available. As the world uses more electric vehicles, digitalises further, and transitions away from fossil fuels, demand for lithium might seem self-evident. However, this demand is not guaranteed, as a new type of battery technology that does not use lithium could be discovered. So, there remain significant risks.
What is the best lithium stock to invest in?
Naming a single stock as the best prospective lithium investment would be difficult if possible. Instead, an investor who believes the demand for lithium will continue to rise might choose to invest in many different lithium-related companies that are set to grow from that demand. This is where lithium ETFs can become useful but these also have significant risks.
How to invest in lithium UK?
Some lithium ETFs are available to UK investors, including the Global X Lithium & Battery Tech ETF and the Amplify Lithium & Battery Technology ETF.
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