Exciting trends and themes are always appearing in the market and, unlike a decade or so ago, investors today easily can tap them through exchange-traded funds (ETFs), such as the Global X Lithium & Battery Tech ETF (LIT).
Lithium and batteries are a theme many investors will recognize due to their association with electric vehicles already introduced by Tesla Motors (NASDAQ: TSLA), General Motors (NYSE: GM), Nissan Motor Co., Ltd. (OTCMKTS: NSANY) and other manufacturers. Each of those car builders uses lithium-based battery technology.
Tesla recently made headlines for its attempt to start lithium-ion battery production at its new Gigafactory in Nevada. The Gigafactory is projected to employ 6,500 full-time workers by 2018 and singlehandedly double the world’s production capacity for lithium-ion batteries, according to Tesla.
In addition to investing in companies that produce lithium batteries, LIT also invests in lithium mining operations. Assets under management for LIT total $207 million.
The expense ratio is 0.75%, but it does offer a 0.61% dividend yield to help offset that fee. Over the last 12 months, the fund has returned an incredible 30% as the lithium phenomenon truly took off. Returns in prior years weren’t nearly as strong, compared to the show of sudden vivacity in the momentum-gaining lithium-ion battery trend.
Top holdings for LIT include FMC Corp. (FMC), 24.70%; Sociedad Quimica y Minera (SQM), 14.90%; Samsung, 6.32%; Tesla Motors (TSLA), 6.04%; and Albemarle Corp. (ALB), 5.02%.
If you believe the trend upwards in the lithium battery industry and related technologies is only just beginning, Lithium & Battery Tech ETF (LIT) could be a strong position for your portfolio.
As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.