ProShares is launching an exchange-traded fund that will solely invest in companies that mine for metals needed for batteries used in products such as electric vehicles and consumer electronics, according to Simeon Hyman, the firm’s global investment strategist.
The ProShares S&P Global Core Battery Metals ETF
will begin trading on the NYSE Arca Thursday, Hyman said by phone. “The focus is on the miners of lithium, nickel and cobalt,” he said. “Those are super critical to putting together lithium ion batteries.”
The new ETF targets companies that supply the raw metals for batteries used in electric vehicles, laptops, smartphones and energy storage devices, according to ProShares. Hyman said the fund provides exposure to the “dramatic increase in demand for these end uses.”
The ProShares ETF tracks the S&P Global Core Battery Metals Index, which currently consists of 41 companies in more than 15 countries such as Australia, Indonesia, South Africa and China, according to a statement from the firm.
The miners in the index, which is reconstituted annually in July and rebalanced quarterly, should all be profitable, according to Hyman. He said the companies are “weighted by the ratio of their production value” of lithium, nickel or cobalt to their overall revenue.
“The miners make money,” said Hyman. “The miners are already turning significant profits.”
That may not necessarily be the case for electric car companies, which along with consumer electronics and energy storage, are helping drive demand for batteries, according to Hyman.
But “you can’t start poking holes in the ground wherever you want to start digging for lithium,” said Hyman. The miners own the rights to the natural resources, and the barriers to entry are high, he said.
The new ETF is part of a group of thematic funds offered by ProShares. Others include the ProShares DJ Brookfield Global Infrastructure ETF
ProShares Metaverse ETF
and ProShares S&P Kensho Cleantech ETF
“Electric vehicles and energy storage are very important parts of the evolution towards clean energy,” Hyman said. But the sources of demand for metals mined by companies held in the ProShares S&P Global Core Battery Metals ETF also go beyond the clean energy theme, he added.