New electrification metals ETF gives investors another way to play the energy transition
Investors have a new way to bet on the commodities that are critical to a green energy future: The KraneShares Electrification Metals Strategy ETF launched on Thursday. The new fund tracks the Bloomberg Electrification Metals index and buys futures contracts on metals like aluminum, copper, zinc and lithium. It has an expense ratio of 0.79% and trades on the NYSE Arca under the ticker KMET. Metals have become a key focus of the energy transition, with rising demand for batteries , solar panels and other pieces of machinery straining the existing supply of these commodities. For example, demand for lithium — a key component in car batteries — is expected to increase more than 400% between 2021 and 2030, according to estimates from Deutsche Bank . Supply is not expected to keep with demand, which would keep upward pressure on prices for the foreseeable future. The KraneShares fund is not the only ETF on the market that gives investors exposure to these industries. For example, VanEck offers a Green Metals ETF (GMET) as well as a Rare Earth/ Strategic Metals (REMX) fund, which hold individual stocks in these industries. Global X offers a Lithium & Battery Tech ETF (LIT) , which holds many companies involved in this process. There are also some funds available that can hold futures contracts for the underlying metals, such as the United States Copper Index Fund (CPER) or the Invesco DB Base Metals Fund (DBB) .
