Batteries are primed to power the 21st century in goods ranging from ubiquitous smart devices to battery-powered electric vehicles and large grid-scale energy storage. Hence, the rollout on Wednesday of the Amplify Advanced Battery Metals and Materials ETF (BATT).
This actively managed fund invests in companies that get a big chunk of their sales from the mining, exploration, production, processing or recycling of advanced battery metals and materials including lithium, cobalt, nickel, manganese and graphite.
BATT’s portfolio holdings must get at least half of their revenue from—or be in the top five and have at least 10 percent of global market share of—any advanced battery material.
The fund’s current roster of 40 companies lacks many of the big mining and production names that most investors associate with the metals and materials space. The top five holdings are Katanga Mining Ltd., a Canadian company with operations in the Democratic Republic of Congo; China Molybdenum Co.; Lundin Mining Corp., a Canadian company with operations around the world; Sociedad Quimica y Minera De Chile S.A.; and Albemarle Corp., a Charlotte, N.C.-based chemical company involved in lithium.
BATT’s sub-advisors are Toroso Investments and Exponential ETFs—the former makes the investment calls and the latter makes the trades. Amplify ETFs is the fund’s sponsor.
According to the fund’s prospectus, Toroso puts eligible securities into one of four groups generally based on the advanced battery material they have the most exposure to. Companies exposed to lithium, cobalt and nickel have their own groups, while the fourth group comprises companies exposed to manganese or graphite, along with recyclers of battery materials.
Toroso employs its own weighting system based on current supply-and-demand factors for the targeted battery materials. It also looks at various market conditions, along with regulatory and geopolitical risks. The respective weights for the four groups are adjusted annually.
The fund’s size will range from 35 to 55 securities across all market-cap sizes. Its net expense ratio is 0.72 percent.
Perhaps BATT’s closest comparable among existing exchange-traded funds is the Global X Lithium & Battery Tech ETF (LIT), which invests in the full lithium cycle from mining and refining through battery production. That fund debuted in July 2010, and has amassed nearly $985 million in assets under management. It charges an expense ratio of 0.75 percent.
LIT’s annualized return since inception (through May 31) was 2.33 percent, according to Global X. It reached its all-time high north of $45 in late 2010, and then gradually sunk to its nadir of about $18 in early 2015. The fund currently trades in the $34 range.