This is the first-of-its-kind ETF in the electric vehicle market that focuses exclusively on the metals used in the EV ecosystem.
Leading global asset management company Invesco has launched a new exchange-traded fund (ETF) focusing on a niche market. Invesco is betting on the boom in electric vehicles and foresees an opportunity in the metals required for EVs as well as the broad energy transition.
Invesco ETF
On Wednesday, April 27, the financial giant launched the Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF, exclusively focusing on such metals. The Invesco ETF trades under the ticker EVMT and holds futures contracts tied to copper, aluminum, cobalt, nickel, zinc, and iron ore.
Interestingly, Lithium, a key metal in making EV batteries has been missing. Jason Bloom, head of alternatives ETF product strategy at Invesco, said that futures trading in Lithium doesn’t currently meet the firm’s minimum liquidity threshold for ETFs.
This is the first-of-its-kind ETF providing access to the electric vehicle transition theme. Thus, it will allow investors to solely focus on industrial metals. It is also different from midstream investment opportunities in companies manufacturing EVs and batteries. Speaking of the development, Bloom said:
“EVMT will be the first commodities fund to offer exposure to an electric vehicle theme, as well as the only ETF that considers metals necessary for whole car production, rather than a focus on battery production. By considering the whole car production through a commodities lens, the composition of EVMT focuses on the full opportunity, which affects the weightings of the included metals.”
Sure in the Metal Prices
The metal prices have shot up quickly this year, especially after Russia’s invasion of Ukraine. but bloom said that this is just the beginning and he expects further gains ahead. Speaking to CNBC, Bloom further added:
“Growth in demand for metals is part of the growth in EVs, and was beginning to catch up and in some cases outstrip supply. The war in Ukraine simply highlighted the upside risk in these commodities. We feel like there’s a fair amount of durability to the current fundamentals in the market”.
Bloom said that the decision to launch this EVMT ETF focusing on metals used in the EV space comes amid client demand. This was also a natural call considering Invesco’s involvement in the broader commodity market. Invesco will leverage its expertise in derivatives to optimize the rolling contracts. “We’re very excited about the prospects for these markets… buckle your seatbelt – you can’t guarantee returns [for commodities], but we’re pretty comfortable forecasting volatility,” Bloom said.
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