As technology advances, the materials needed to support new products now include more exotic strategic metals. Investors who are interested in capturing this new segment can look to a relatively new ETF that provides exposure to a more modern materials space.
“There’s a modern day gold rush, and it is really happening in these metals that many people haven’t heard about before,” Christian Magoon, CEO of Amplify ETFs, said at the 2018 Morningstar Investment Conference. “So it’s lithium, cobalt, nickel, manganese, and even materials like graphite.”
To help investors capture these new producers, Amplify recently launched the actively managed Amplify Advanced Battery Metals and Materials ETF (NYSEArca: BATT).
The Amplify Advanced Battery Metals and Materials ETF tries to provide investors with total return by investing in companies engaged in the mining, exploration, production, development, processing or recycling of the metals and materials being utilized in advanced battery technologies, such as Lithium, Cobalt, Nickel, Manganese and Graphite.
“They are used in things like your smart device – that’s right, electric vehicles, solar power,” Magoon said.
Underlying components must derive 50% or more of their revenue, or be in the top five and have at least 10% of global market share, of any advanced battery material. The portfolio managers also weight companies by screening the current balance between supply and demand for each Advanced Battery Material, forecasted demand growth, commodity price outlook, likelihood of new supply discovery and regulatory and geo-political risk.
Furthermore, allocations may be tactically adjusted based on the financial fundamentals of a company; the inventory and reserves of an Advanced Battery Material relative to its price; a company’s Environmental, Social and Governance (ESG) score; and the discovery of new reserves or other causes of increased or new Advanced Battery Material production.
For more ETF-related commentary from Tom Lydon and other industry experts, visit our video category.