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Lithium stocks are having a great year, thanks largely to rosy growth forecasts for electric vehicles (EVs). Lithium is needed to make the rechargeable lithium-ion batteries that power electric vehicles, and it is needed to make energy storage products, another fast growing market.
Actions of the pioneer of electric vehicles Tesla (NASDAQ: TSLA) are up 586% this year through November 25. While major lithium manufacturers haven’t had the same success, their performance is still stellar. So far in 2020, shares of Albemarle (NYSE: ALB), Chilean chemical and mining company, or SQM (NYSE: MQ), is Livent (NYSE: LTHM) – the three largest lithium producers listed on a major US stock exchange – gained 87%, 86% and 84% respectively. And some of the smaller players have even bigger payouts.
If you want to gain exposure to the large lithium space but want to spread your bets across many stocks, you might consider investing in Global X Lithium & Battery Tech ETF (NYSEMKT: LIT).
Image source: Getty Images.
Global X Lithium & Battery Tech ETF: the basics
According to its prospectus, the ETF Global X Lithium & Battery Tech “invests in the full cycle of lithium, from mining and refining the metal, through the production of batteries.” It is not an actively managed fund. Rather, it aims to track the performance, gross of fees and expenses, of the Solactive Global Lithium Index. The fund’s expense ratio is 0.75%, which is relatively reasonable.
The fund had 40 holdings as of November 25 and a net worth of nearly $ 1.3 billion a day earlier. Based on the value of the dollar, 49% of the holdings were based in China, 21% in the US and 11% in South Korea, as of 31 October. No other country accounts for more than 5% of total holdings. This breakdown by country reflects China’s great strides in the lithium sector and related markets in recent years.
Global X Lithium & Battery Tech ETF: the top 10 positions
|
Ranking |
Company |
Market capitalization |
Nation |
Weight (% of portfolio) |
Yield since the beginning of the year |
|---|---|---|---|---|---|
|
1 |
Albemarle | $ 14.3 billion | WE | 12.15% | 87.2% |
|
2 |
WORLD |
$ 68.6 billion |
China | 5.80% | 407% |
|
3 |
Ganfeng Lithium |
$ 11.6 billion |
China | 5.53% | 245% |
|
4 |
Samsung SDI | N / A | South Korea | 5.06% | N / A |
|
5 |
Lg chem |
N / A | South Korea | 4.81% | N / A |
|
6 |
SQM | 12.7 billion dollars | Chile | 4.79% | 86.3% |
|
7 |
Panasonic |
$ 25.3 billion |
Japan | 4.77% | 18.4% |
|
8 |
Tesla | 544 billion dollars | WE | 4.75% | 586% |
|
9 |
Eve Energy | N / A | China | 4.69% | N / A |
|
10 |
Contemporary Amperex technology | N / A | China | 4.24% | N / A |
|
All holdings |
Global X Lithium & Battery Tech ETF |
$ 1.3 billion in net worth (Nov 24) | WE | N / A | 94.9% |
Data sources: Global X and YCharts. YTD = from the beginning of the year. N / A = Not available or not trading with US market capitalization and yields as of November 25; percentage weight data as of November 24th.
Albemarle (# 1), Ganfeng (# 3) and SQM (# 6) are lithium miners. Albemarle and SQM are not pure games, because they produce a range of chemicals.
Where is Livent? The U.S.-based pure lithium producer is the 19th largest holding in the ETF, accounting for nearly 2% of the portfolio. How about Lithium Americas? The Canadian-based junior lithium miner, which is not yet mining any products for sale, is the fund’s 33rd largest holding.
BYD, the number 2 holding company, says it is “the largest electric vehicle manufacturer in the world.” It is also a leading manufacturer of rechargeable batteries for many applications. Warren Buffett’s Berkshire Hathaway owns a large stake in the company.
Next up is number 4, Samsung SDI. It manufactures lithium-ion batteries for a variety of uses and manufactures electronic materials used in semiconductors and displays. It is followed by LG Chem, which is the world’s largest manufacturer of electric vehicle batteries, and has other businesses.
Panasonic, the number 7 holding company, manufactures electronic products for a wide range of industrial and consumer applications. Provides lithium-ion batteries for electric vehicles and energy storage systems.
Tesla, number 8, has solar energy and energy storage businesses in addition to its premium electric vehicles. It is likely included in the lithium ETF because it produces lithium-ion battery packs for its non-China-made vehicle and energy storage products at its Nevada Gigafactory. Panasonic, which supplies the battery cells, is its partner here.
Finally, Eve Energy and Contemporary Amperex Technology both produce lithium batteries.
A solid solution for some investors
The Global X Lithium & Battery Technology ETF looks like a solid option for investors wanting broad exposure to the lithium space, which has been highly volatile over the long term. Keep in mind that, like any ETF (or mutual fund), its diversification can be both an advantage and a disadvantage.
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