Despite economic slowing forecast this year, the supply constraints for many commodities mean that prices are likely to remain elevated, according to the Economist Intelligence Unit. For advisors looking to capture opportunity within commodities and the metals that will play an increasing role in the global movement towards electrification and reduced emissions, the KraneShares Electrification Metals ETF (KMET) is a fund to consider.
Prices for commodities are expected to recede somewhat this year because of potential recession and economic slowing globally, reported the EIU, the analysis and research branch of the Economist Group. That said, the most likely case is marginal increases in supply this year that are likely to create sustained price pressure for much of the year.
The outlook for base metals according to the EIU is one of volatility as supply continues to recover from the boom in demand driven by economic recovery in 2021 and the disruptions from Russia’s ongoing war in Ukraine. Demand is predicted to drop but China’s economic recovery and increased production across Asia and Europe is anticipated to create a foundational floor for metal prices in 2023.
The KraneShares Electrification Metals ETF (KMET) offers targeted exposure to the metals necessary for the electrification and clean energy transition of the world’s economy in the pivot to net-zero emissions. As an increasing number of industries and corporations shift to lower emissions practices and policies, the demand for these vital metals is expected to increase. China is home to the largest electric vehicle market and as the country’s economy works to move into recovery mode this year, demand for electrification metals could increase.
KMET launched on October 13, 2022, and is currently trading above both its 20-day Simple Moving Average and its 50-day SMA. Since its inception, the fund is up 19.17%.
The fund seeks to track the Bloomberg Electrification Metals Index and is comprised of futures contracts on copper, nickel, zinc, aluminum, cobalt, and lithium. These metals are all core components for batteries, electric vehicles, and the renewable energy infrastructure being created and expanded as countries aim for net-zero emissions by 2050 to curtail global warming.
KMET has an expense ratio of 0.79% and is part of the climate-focused lineup of funds from KraneShares.
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