Lithium ETF Overview

May 10, 2018


 

Are you risk averse but still interested in taking advantage of the Lithium boom?  In this post, we take a fresh look at the Lithium ETF scene. There are a total of two ETF”s in the sector at the moment.  The well known major and most respected LIT and the newer entrant KARS. We have covered LIT several times by now which we revisit again as well as introduce KARS to those unfamiliar with it.  

Before we get into the actual two names themselves, we thought it would be interesting to see how their popularity have trended over time.  You’ll see in the image below, unsurprisingly, that the interest in the search term “Lithium ETF” peaked in September 2017 as the Lithium boom hit a crescendo.  Since then, amidst fears of oversupply and bearish stock reports (Ex: Morgan Stanley’s supply glut report), interest in the sector has waned.

Screen Shot 2018-05-10 at 9.02.00 PM

The Two Players:  

LIT:  This is the largest Lithium based ETF (nearly 1 billion net assets in scale) and the one which has the most Lithium focused companies held.  The largest overall holdings of the ETF are ALB (16%), FMC (16%) and SQM (7%). The most notable junior miners are held in the ETF and some of them, like Galaxy, Pilbara and Orocobore make up more than 3% each.  In addition to the Lithium producers, the ETF also holds stock in battery producers (ex: Panasonic and LG) as well as companies in the EV space (Tesla). Overall, the ETF has performed well over the last 1 year (+19%), 3 years (12%) and 5 years (+6%). However, like many of the Lithium stocks, year to date it is down (-16%). Will you be buying on this dip or looking for a more concentrated play in one of the Lithium stocks themselves?

KARS:  The purpose of KARS is to track the performance of companies who produce “electric vehicles and/or their components, or engaged in other initiatives that may change the future of mobility.”  It pales in comparison to the LIT ETF at only $29 Million (USD) in assets. On the other hand, KARS compared to LIT, is much more diverse.  It holds shares in companies ranging from Google and Tesla to SQM and Great Wall Motor Company. Since inception, which was in January of 2018, it is down -10%.  Talk about a tough time to enter the marketplace! Will you be investing in KARS? Drop us a note and let us know!

As a final note, we love hearing from our readers and give kudos to the most recent email from Mitchell who recommended that we cover the Lithium ETF scene.  Thanks Mitchell!

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