Most renewable energy funds offer exposure to publicly-traded wind companies or municipal debt financing solar projects. But there are other ways to capitalize on the renewable energy revolution. For instance, certain commodities are critical to producing electric vehicles, battery energy storage systems, and other renewable infrastructure.
In this article, we’ll look at Element Funds’ new Element EV, Solar & Battery Materials Futures Strategy ETF (CHRG) and how it provides exposure to lithium, nickel, copper, and cobalt.
See our Active ETFs Channel to learn more about this investment vehicle and its suitability for your portfolio.
Why Invest in Minerals?
Renewable energies will see trillions of dollars of new investment over the coming decade. For example, President Biden’s Inflation Reduction Act and the Bipartisan Infrastructure Law direct billions of dollars toward clean energy subsidies. These subsidies incentivize domestic lithium mining, extend electric vehicle tax credits, and more.
Electric vehicles, battery storage technologies, and other renewable energy infrastructure is increasing demand for lithium, nickel, copper, and cobalt. For example, a lithium-ion battery typically uses lithium cobalt oxide as the cathode material and graphite as an anode material. And a single Tesla Model S might require over 60 kg of lithium carbonate.
According to Reuters, an estimated $1.2 trillion will be spent developing and producing electric vehicles alone through 2030. And to meet the spike in demand, the global economy will likely need more than 200 new mines and plants to supply the necessary raw materials. As a result, many of these raw materials could see a sustained price increase.
What’s in the New ETF?
The Element EV, Solar & Battery Materials Futures Strategy ETF (CHRG) provides investors with institutional-quality exposure to the futures contracts and commodities essential to the shift to a net-zero carbon renewable economy, including lithium, cobalt, nickel, and copper. And unlike other funds, investors aren’t beholden to company performance.
“Over the past several years, we’ve seen enormous investor demand in strategies linked to the EV and renewables revolution,” says Element Funds CEO Will McDonough. “However, critical metals are not an investment you can set and forget. We will utilize our global experience to continuously monitor and revaluate CHRG’s portfolio allocations and weighting based on real-time industry developments.”
Will McDonough and the fund’s other managers have more than 70 years of combined experience investing in natural resources. McDonough has managed billions of dollars for major investment banks. John Raymond and John Calvert—two other managers—are also principals at the natural resources-focused private equity firm, The Energy & Minerals Group.
The fund charges a 0.95% expense ratio and has already amassed nearly $6 million in assets since its launch.
Alternatives to Consider
The Element EV, Solar & Battery Materials Futures Strategy ETF (CHRG) isn’t the only fund offering a unique way to participate in the renewable energy revolution over the coming decade.
Some other funds to consider include:
Lithium & Battery Tech ETF (LIT) – The Global X Lithium & Battery Tech ETF (LIT) invests in companies throughout the lithium cycle, including mining, refinement, and battery production. The fund charges a 0.75% fee with a portfolio of about 50 companies.
Amplify Lithium & Battery Technology ETF (BATT) – The Amplify Lithium & Battery Technology ETF (BATT) invests in a portfolio of more than 80 companies, including battery storage solutions, metals and mineral companies, and EV makers with a 0.59% fee.
The Bottom Line
Renewable energy investment is on the rise, but most funds limit exposure to publicly-traded companies. However, the Element EV, Solar & Battery Materials Futures Strategy ETF (CHRG) offers a unique opportunity to invest in lithium, cobalt, nickel, and copper, the essential commodities supporting the shift to a net-zero economy.
Take a look at our recently launched Model Portfolios to see how you can rebalance your portfolio.
