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Go BATTy For This New Battery ETF

ETF Professor

Investors looking to tap into expected demand for materials used to manufacture batteries for electric vehicles, among other high-tech products, have a new exchange traded fund to consider.

The Amplify Advanced Battery Metals and Materials ETF (NYSE: BATT) debuted Wednesday. BATT provides exposure to publicly traded companies engaged in the mining and production of cobalt, graphite, lithium, manganese and nickel.

What Happened

“BATT constituents must derive 50 percent or more of their revenue, or be in the top five and have at least 10 percent of global market share, of any advanced battery material,” according to a statement issued by Chicago-based Amplify.

The new ETF will be co-managed by Toroso Investments, LLC and Exponential ETFs. BATT came to market with 41 holdings. The new ETF is the sixth in Amplify's lineup.

Why It's Important

Cobalt, graphite, lithium, manganese and nickel are essential to the production of lithium-ion batteries, which power electric and hybrid vehicles. Data confirm that the market of lithium-ion batteries is booming on a global basis.

“According to Orbis Research, the global Lithium-ion battery market, which accounted for $29.86 billion in 2017, is expected to reach $139.36 billion by 2026, growing at a compound annual growth rate (CAGR) of 18.7 percent,” according to Amplify data.

Large supplies of those minerals are found in emerging markets, but that also means lags in boosting production, a factor that underpins the fundamental case for some BATT holdings.

“Given the supply-constrained nature of key commodities required to meet the growing demand for lithium-ion batteries, the fundamental outlook for the underlying advanced battery metals remains robust,” said Amplify.

What's Next

With demand for electric vehicles expected to soar, BATT could find a receptive audience among investors. There's some evidence that investors will embrace ETFs focused on specific minerals in the production of high-tech gear. The Global X Lithium & Battery Tech ETF (NYSE: LIT) is almost eight years old and has over $984 million in assets under management.

BATT's top 10 holdings combine for about a third of the new ETF's weight. The new fund charges 0.72 percent per year, or $72 on a $10,000 investment. Amplify has over $750 million in combined ETF assets under management.

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