Some materials ETFs are taking their lumps this year, but the long-term case for the Global X Lithium & Battery Tech ETF (NYSEArca: LIT) remains compelling, particularly as demand for components for electric vehicle batteries increases.
LIT, which is nearly nine years old, tracks the Solactive Global Lithium Index. The underlying index is designed to measure broad-based equity market performance of global companies involved in the lithium industry. As a thematic ETF, LIT has a growth feel, but some of its growth components are now offering attractive value.
“Production of battery metals such as graphite, lithium, and cobalt will have to increase by nearly 500% by 2050 to meet the growing demand for clean energy technologies, the World Bank reported Monday,” reports Cecilia Jamasmie for Mining.com.
LIT Can Liven Up
With the popularity of electric vehicles spurring demand for automobile offerings from carmakers like Tesla, the lithium industry has taken a new turn. More uses will be found for lithium as the move to energy dependence from fossil fuels continues to increase demand for efficiency. Still, lithium miners have faced some struggles.
World Bank research “confirms the premise of a first report, published in 2017, which warned that the more ambitious climate targets become, the more minerals and metals will be needed,” according to Mining.com.
Global automotive industry observers believe electric vehicles will reach comparable price points to traditional internal combustion engine vehicles sometime in the next several years, making it more compelling for drivers to make the switch to electric vehicles.
With their own supply and demand issues, based on the variety of clients, it’s essential to understand the differences. That said, the variety in related funds also puts on the display the illustration of choice. The expanding reach of ETFs means individual investors are looking at sectors that may be on good growth trajectories.
The World Bank “warns of the disruptions covid-19 is causing in global markets and that developing countries that rely on minerals are missing out on essential fiscal revenues,” according to Mining.com.
“As their economies begin to reopen, the bank noted, they will need to strengthen their commitment to climate-smart mining principles to mitigate negative impacts.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.