Invest in Lithium with This Fund

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker, financial journalist, and money manager.

The Global X Lithium & Battery Tech ETF (NYSEARCA:LIT) invests in the full lithium cycle, starting with mining and refining the metal and finishing with battery production.

This ETF gives broad exposure to the metal, while offering targeted, concentrated exposure tilted toward micro-cap stocks. Good tracking of its underlying index tempers the fund’s variable spreads and high expense ratio. For investors looking for an exchange-traded fund (ETF) to gain exposure to the lithium niche, LIT is the only game in town.

LIT is heavily weighted in Asia, with 43.3% of its net assets in China, 11.7% in Korea and 6.7% in Japan; 22% in the United States; 5.2% in Australia; and 4.8% in Chile. Its top three holdings include 12.27% in Albemarle Corp. (NYSE:ALB); 5.36% in Ganfeng Lithium Co. (OTCMKTS:GNENF); and 5.35% in Tesla, Inc. (NYSE:TSLA).

Chart courtesy of StockCharts.com

The fund has amassed $1.42 billion in assets under management with 42 holdings and an average spread of 0.09%. Its expense ratio sits at 0.75%, which means it is relatively more expensive to hold in comparison to other exchange-traded funds. LIT currently trades around $55, giving it a 0.85% yield.

LIT tracks a market-cap-weighted index of global lithium miners and battery producers. The fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Lithium Index.

Two main reasons to invest in this Global X fund are thematic exposure and efficient access. The fund is a thematic play on lithium and battery technology, and it offers efficient access to a broad basket of companies involved in lithium mining, lithium refining and battery production.

However, I urge all interested investors to exercise their own due diligence to determine whether any stock or fund meets their own portfolio strategy and goals.

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.

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