In this article, I will take a look at the 10 best lithium ETFs to buy in 2023. We will also provide an overview of what lithium is and why it is an important metal for the future of clean energy.
Panasonic, Tesla, LG Chem, and Samsung SDI are just a few of the well-known companies that use Li batteries. Buying shares of an exchange-traded fund specializing in lithium batteries is one way to get into this dynamic sector.
There is a growing need for lithium batteries due to the increasing popularity of electric vehicles.
Investors often do extensive due diligence on a specific lithium ETF before purchasing. If you are investing for the long haul, it is prudent to spread your money around. If one performs poorly, it won’t significantly impact your profits.
- You will learn how to invest in Lithium ETFs
- The 10 best lithium ETFs to Buy
- List of brokers to buy Lithium ETFs
- Answers to some of the frequently asked questions on Lithium ETFs
What Are lithium ETFs?
It is an exchange-traded fund that invests in businesses whose primary source of revenue is lithium. Exchange-traded funds can be purchased on the stock market, and shares in them can be purchased through a stockbroker.
Every fund typically monitors the performance of a specific sector or index.
Only a small number of ETFs have a lithium-specific focus. But many people have lithium firms as significant stakes in their portfolios. Since they employ the mineral to power their automobiles, manufacturers of eclectic vehicles are a well-liked option to profit from rising lithium prices.
How To Invest In Lithium ETFs
If you’re looking to invest in the rapidly growing lithium market, you might want to consider purchasing shares of a lithium ETF. Companies that mine, refine, and manufacture lithium-based goods fall under this category.
An Exchange Traded Fund (ETF) in lithium allows investors to get exposure to the whole lithium industry. This may be beneficial if you are unsure which companies or stocks to invest in. Easy buying and selling is another perk of ETFs because they tend to be more liquid than individual equities.
Before investing your money, ensure you understand the lithium ETF and its holdings. Think about the fund’s expenses as well. You may open an account with an authorized broker to purchase the ETF and invest it whenever you choose. To streamline the procedure, consider the following:
- Pick an exchange-traded fund (ETF) that interests you.
- The first step is to locate a reliable broker or an exchange where you may trade it.
- Get started with a broker by creating an account using your name, email, and password.
- Please complete the required identity verification steps and submit your tax return.
- Following your research, place a purchase order to acquire ETF shares.
High drawdowns may be avoided with careful mental preparation and execution of a sound trading plan. If you’re feeling particularly greedy, it’s probably best to avoid the markets, happy or angry.
In addition to the threats mentioned above, excessive trading activity is a frequent nemesis for many market participants. When you’ve reached your daily or monthly quota, holding out for too long might cause you to lose your hard-earned gains.
The 10 Best lithium ETFs To Buy
The table below lists the lithium ETFs we’ve carefully chosen. To locate them on your broker account, use their ticker symbols. Alternatively, keep reading to find out more specifics about each.
1. Amplify Lithium and Battery Technology ETF (NYSEARCA: BATT)
BATT is a recent fund that was just established in 2018. It is considerably smaller than the Global x above, with only 87 holdings and net assets of about $200 million.
It makes investments in companies that make money from the research, development, and use of lithium battery technology while keeping track of the performance of the EQM Lithium & Battery Technology Index.
The fund managed by Amplify invests in businesses worldwide, but it gives the Asian lithium industry a lot of weight. It makes investments in a range of businesses, some of which are well-known producers of electric vehicles. Some of the most significant investments made by the fund include Rivian Automotive, BYD, and Tesla.
Its price has gone through significant changes since its launch in 2018. Although it lost 70% of its value in the first 18 months of trade, it recovered those losses when the lithium bull run began in 2020.
BATT may not be as big as other lithium ETFs. Still, it offers investors a decent way to participate in the market for lithium batteries, which is only anticipated to expand in the coming years.
2. Global X Lithium and Battery Technology ETF (LIT)
Global X Lithium and Battery Technology is a moderately established ETF globally. It was established on July 22, 2010, and currently manages $4.35 billion worth of assets.
A firm must have a Free Float Market Capitalization of $50 million to be considered for admission. It should be traded with a mean daily value of $200,000 for the previous three months and be listed on a licensed stock market.
Detailed annual evaluations and rebalancing reports are made available to the public. To fulfill the listing criteria of Shanghai Stock Connect (SSE) and Shenzhen Stock Connect, the ETF currently restricts the total number of members to 30%. (SZSE). It is mainly traded on the NYSE market and now has 39 positions. The 10-year annualized return is 10.88% on average.
The significant increase in the value of the LIT ETF in recent years is most likely a result of the rising demand and significance of lithium. It firmly smashed over the previous barrier level of $44 and shot to the top of the rankings. The ETF, like BATT, is currently sitting at 61.8% of its original price.
3. WisdomTree Battery Solutions UCITS ETF (LSE: CHRG)
Another recently launched ETF is the WisdomTree Battery Solutions ETF. Investing in battery technology industry businesses was established in 2023 to track the performance and value of the WisdomTree Battery Solutions Index.
Many of the firms it controls are headquartered in the USA or China, like most lithium-related funds. These two areas make up over half of the ETF’s weight.
Lithium battery producers like Simplo Technologies and Enersys are among its main assets. It is more evenly distributed than other ETFs on our list because its top 10 holdings only make up 30% of its overall holdings.
The timing of CHRG’s entry into the market was ideal. Since its beginning in March 2020, it has primarily gone higher. Despite a minor price decline in the first few weeks, it has subsequently had a rally of more than 100%.
It is a more varied ETF since it focuses on battery firms and has a large number of assets that are not direct plays on lithium.
4. VanEck Vectors Rare Earth/Strategic Metals ETF (REMX)
The VanEck ETF was established on October 27, 2010. The Exchange Traded Fund uses a physical ETF structure to follow the performance of the MVIS®Global Rare Earth/Strategic Metals Index (MVREMXTR). Peter Liao is the fund’s portfolio manager and stock analyst, while Guo Hua is a CFA.
The fund has seen its fair share of ups and downs during the past 10 years. It has been trading since its debut at $246. As of this writing, the cost has progressively decreased to about $80.
State Street Bank and Trust Company are now guarding the VanEck Vectors Rare Earth/Strategic Metals.
5. ARK Autonomous Tech. & Robotics ETF (NYSEARCA: ARKQ)
Another ETF that has exposure to lithium through several of its holdings is ARKQ, which is not explicitly focused on the metal. If you’re greedy, it’s probably best to avoid the markets. It’s four most significant investments in lithium-based technology are Tesla, BYD, Nio, and Niu technologies.
In addition to the EV sector, it also makes investments in robotics, 3D printing, energy, and space, giving investors simple access to various emerging markets.
Despite diversifying its assets internationally, most of the fund is invested in US-based businesses. Over 50% of the fund’s assets are held by its top ten holdings, with Tesla representing over 10% of the portfolio.
Its performance has been strong from its start in 2014, and in early 2021 it achieved its peak. Despite not offering a straight-play lithium investment, ARKQ’s broad portfolio offers plenty of opportunities in fast-growing regions. The fund provides an indirect means of investing in the commodity, and many of its assets rely on lithium batteries.
6. ETFS Battery Tech & Lithium ETF (ACDC)
The market has not seen much investment in ACDC yet. It was founded on August 30, 2018, and thus far, it has generated a total return of 21.17%.
Investors may buy into the ETF, which tracks the performance of the Solactive Battery Value-Chain Index, for as little as $500. Australian stocks make up 10.60% of the entire asset allocation, while foreign stocks make up 89.23%.
The index only includes businesses with less than 25% of their income from oil or gas to maintain parity with environmentally friendly statures.
The minimum requirements for inclusion in the ETF are a free-float capitalization of at least $200 million and a three-month daily trading average of at least $1 million.
ACDC’s price action chart has a pattern that is similar to LIT’s. If not for the fall imminent with all the lithium stocks, the fund’s value would have nearly quadrupled within 4 years. The ETF encountered considerable resistance close to $100 and is currently trading at about $70.
7. First Trust Nasdaq Clean Edge Smart Green Energy ETF (NASDAQ: QCLN)
The First Trust Nasdaq Clean Edge Smart Green Energy ETF is ranked last on our list. It’s another fund that monitors the entire renewable energy industry rather than just lithium firms.
A little over 20% of the fund is allocated to investments in the automotive sector, or QCLN’s case, the market for electric vehicles.
Investors can access lithium through the ETFs’ stakes in several top EV manufacturers worldwide. In reality, lithium is heavily exposed in its two most significant holdings.
Tesla is its biggest investor, followed by the lithium firm Albemarle Corporation. Nio and xPeng are two more major lithium investments that rank in the top 10.
Its success mirrors that of the renewable energy sector, which has witnessed a rise in popularity in recent years. The fund increased 400% between 2020 and 2021 before losing some of its gains in 2023. The second largest fund on our list, QCLN, has around $3 billion under management.
8. Sociedad Química y Minera de Chile (SQM)
The headquarters of Sociedad Qumica y Minera de Chile, also known as SQM, is in Santiago, Chile. As a result, the business has easy access to some of South America’s most fabulous lithium reserves, including the salt flats in the Atacama Desert. The location of SQM aids in reducing manufacturing costs. The firm also makes iodine, potassium, industrial chemicals, and nitrates for fertilizers in addition to lithium.
Over the previous year, SQM’s profits and revenue have grown significantly. When Chilean voters chose left-wing activist Gabriel Boric as president in late 2021, their stock did fall. Investors were concerned that he would demand greater environmental regulation of mining firms like SQM.
Despite these worries, investors thought that the strength of the lithium market exceeded the political risk, and SQM’s share price swiftly recovered to an even greater level.
In January 2023, the Chilean government also granted SQM a contract for lithium development, demonstrating its support for the firm and the need for its services.
9. Piedmont Lithium Limited (PLL)
Another newcomer in the lithium mining industry in the US is Piedmont Lithium Limited. PLL plans to open lithium mines in Gaston County, North Carolina, Cape Coast, Ghana, and Quebec, Canada. The business is headquartered in North Carolina as well.
When Piedmont revealed in 2021 that it had struck a lithium supply agreement with Tesla, Inc. (TSLA), its stock price more than quadrupled. Since making this statement, Piedmont has been forced to postpone planned shipments to Tesla because of issues with government permits delaying the anticipated launch of its North Carolina mines.
North Carolina officials have expressed concerns about the project from Piedmont Lithium’s environmental effect. They might decide to postpone it or stop the mining altogether.
PLL stock may be riskier than stocks of more seasoned lithium manufacturing companies due to this political risk and the fact that Piedmont is still not producing a profit.
However, if they decide to open their mine, shareholders should be paid after the significant Tesla acquisition is completed.
10. Livent Corporation (LTHM)
The lithium technology business Livent makes batteries for EVs and portable electronics. Products for energy storage provide around half of their total income. In addition, they employ lithium to create sophisticated polymers and alloys for use in sporting footwear, aviation, and other products.
Philadelphia is where Livent is headquartered. Livent operates mines in Canada and Argentina to obtain the lithium required for their products. Due to their deposits, they are one of Tesla’s primary suppliers of lithium.
Livent is a young business, but they are already making money and are profitable.
Over the previous year, their sales significantly increased, rising from $288 million in 2020 to $420 million in 2021. Future revenues should also remain high if lithium prices do.
List Of Brokers To Buy Lithium ETFs
Lithium investing is not for the timid of heart, much as investing in other essential commodities and metals. Rising demand for a component used to make a product doesn’t always translate to an increase in a company’s sales and earnings.
Additionally, supply and demand affect the raw material market price, so when supply exceeds demand, prices drop. This can also affect sales for the raw material manufacturer, even if overall demand increases. Launching new lithium projects may be expensive, as it is with any mining operation.
However, lithium stocks have done well, and prices have increased over the past five years. Here are six top brokers for purchasing lithium exchange-traded funds.
- SoFi Invest
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Investors may access several asset types affordably using ETFs. Additionally, they can allow investors to increase their returns because they are often more tax-efficient than mutual funds. Due to the considerable liquidity, they may enter and exit the markets as needed with little slippages.
ETFs for lithium is a fantastic method to participate in the expanding lithium market. A lithium battery ETF investment may provide you with several lucrative options.
All the ETFs on our list have had performance over the past year that is close to average or better. Before buying an ETF, investors should do their homework thoroughly. Never invest your whole portfolio in a single asset.
Is Lithium A Good Investment For 2023?
In Q2 2023, its revenue exceeded $9 billion, a yearly rise of 269.42%. The company’s balance statement shows rising revenue and assets together with minimal debt. It looks to be among the top lithium stocks to invest in.
What Is The Best Lithium To Invest In?
- Sociedad Química y Minera de Chile.
- Lithium Americas.
- Piedmont Lithium.
- Ganfeng Lithium.
Is There An ETF For Lithium Stocks?
The Lithium & Battery Tech ETF, which offers exposure to lithium, is one of the most well-known ETFs (NYSEArca: LIT). It makes investments throughout the lithium cycle, from metal smelting and mining to battery manufacturing.
Who Supplies Tesla With Lithium?
It’s crucial to realize that Tesla receives its lithium from various suppliers. Tesla signed a new three-year lithium supply agreement with leading lithium producer Ganfeng at the end of 2021. (OTC Pink:GNENF,SZSE:002460). Beginning in 2023, the Chinese company will supply Tesla with products for three years.
What Is The Best Lithium ETF?
A top high-risk, high-reward wager on new businesses, such as equities in the battery technology sector.
- Lithium & Battery Technology Global X ETF
- Lithium & Battery Technology ETF, amplify.
- Global Clean Energy ETF from iShares.
Is It A Good Time To Buy Lithium Stocks?
As the price of lithium keeps going up, more money is being put into ASX lithium shares in 2023. Due to the transition to sustainable energy and electric cars, there is still a high demand for battery metal.
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