The LIT ETF Has Investors Raking in the Gains

As thematic ETFs continue to gain in popularity, the Global X Lithium & Battery Tech ETF (LIT) continues to make a name for itself.

Rising electric vehicle demands ups the ante on getting ahold of batteries, which require lithium for production. Right now, a shortage of batteries is pushing prices higher for materials like lithium.

“Prices for the three main natural resources have been rising since the start of 2021,” a Goldman Sachs report said. “We believe that in order to promote sustainable EV industries, some countries may consider implementing policies to increase national stockpiles.”

LIT seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Global Lithium Index, which is designed to measure broad-based equity market performance of global companies involved in the lithium industry. LIT gives investors:

  • Efficient Access: LIT offers efficient access to a broad basket of companies involved in lithium mining, lithium refining, and battery production.
  • Thematic Exposure: The fund is a thematic play on lithium and battery technology.
  • Strong fund performance: LIT is up over 160% within the past year.

LIT Chart

Demand Is Surging for Electric Car Batteries

LIT isn’t the only ETF having all the fun. Another fund to indirectly play the cost of rising materials is the Global X Autonomous & Electric Vehicles ETF (DRIV). DRIV, which is up over 130% the past 12 months, seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Autonomous & Electric Vehicles Index.

“Growing demand for electric car batteries will cause prices of the main materials to surge, Goldman Sachs analysts said in a March 18 note,” a CNBC article noted. “That in turn will drive prices of batteries higher by about 18%, affecting the total profit of electric car makers since the battery accounts for about 20% to 40% of the vehicle cost, the Goldman analysts said.”

“While the report didn’t give specific price targets for the commodities, the analysts’ model predicted a return to historical peak prices would more than double the cost of lithium for electric battery makers,” the article added. “That of cobalt would also double, while the cost of nickel would rise by 60%.”

DRIV Chart

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