Batteries have a growing importance in our lives. From mobile phones, laptops and of course, the largest new trend is electric vehicles that require sizeable batteries to enable range and large battery storage for renewable power.
For investors looking to benefit from this trend the main batteries being used are lithium-ion, a technology that has been around since 1985. Their stability and ability to be small in size have seen them take over as the world’s preferred battery technology. Between 1991 and 2018 the price for a lithium-ion battery (in dollars per kWh) fell around 97% while energy density increased three-fold. we see this best in our ever-shrinking movie phones.
However, accessing lithium is not easy for a local investor even though there are some mining companies in the space, most notable locally we have Sibanye-Stillwater*. Sibanye-Stillwater is increasing its stake in Keliber, a Finnish mining and battery chemical company. But this will take some years before production and is currently only a small part of the overall Sibanye-Stillwater group.
This Exchange Traded Fund (ETF) focuses on lithium as the input as well as the finished profit, that is battery technology.
The top holding at just under 10% is Albemarle, a global speciality chemicals company with leading positions in lithium, bromine, refining catalysts and applied surface treatments.
The Top 10 holdings are as below;
Interestingly the top country is China at 36% while the US is second at 23.9%. This is a large change over the last year as China has dropped from over 50% and the US risen.
I like this. Battery tech, and lithium, are definitely a large part of our future. The journey will be bumpy and new battery types may emerge in time, but for a long-term hold, this is a great-looking ETF. As the chart below shows, it has been doing well as of late after many years of going nowhere.
* The writer holds shares in Sibanye-Stillwater
|ETF name||Lithium & Battery Tech ETF|
|ETF issuer||Global X|
|Issue date||22 July 2010|
|Total investment cost (TER)||0.75%|
|ETF Benchmark||Solactive Global Lithium Index|
|Tax-free savings account||No – offshore|
|Number of holdings||39|
|Performance 1 year (annualised)||-17.3%|
|Performance 3 years (annualised)||+29.8%|
|Performance 5 years (annualised)||+10.1%|
|Performance 10 years (annualised)||+8.8%|
At Just One Lap, we are big fans of passive investment using ETFs. In this weekly blog, we discuss ETFs on the local market and the factors you need to consider when choosing an ETF. If you have wondered how one ETF differs from another, this is where you can find out. We explain which index each ETF tracks, what type of portfolio could benefit from holding each ETF, and how the costs will affect your bottom line.