BlackRock has unveiled a new thematic ETF in Europe targeting firms involved in the development of lithium batteries including miners, compound manufacturers, and battery producers.
Lithium demand is expected to double over the next five years.
The iShares Lithium & Battery Producers UCITS ETF (LITM NA) has been listed on Euronext Amsterdam with an expense ratio of 0.55%.
Companies that are considered in violation of UN Global Compact principles or are embroiled in severe environmental controversies are removed from the selection pool.
Firms are chosen for the index based on their revenue exposure to specific FactSet RBICS sectors and the number of patents that they hold related to lithium batteries. Companies are assigned to Tiers 1, 2, or 3 depending on their alignment with the lithium battery theme.
Chosen constituents are weighted by float-adjusted market capitalization with aggregate weight caps of 25% each on Tiers 2 and 3 and individual stock weight caps that vary by tier group: 10% for Tier 1 companies and 5% for firms in Tiers 2 and 3.
The index is reconstituted annually and rebalanced on a quarterly basis.
LITM is BlackRock’s second ETF that enables investors to capture returns attributable to rising demand for base metals that are supporting the climate transition, building on the introduction of the iShares Essential Metals UCITS ETF (METL NA) in October. METL offers investment opportunities in firms engaged in the extraction and processing of metals crucial to a range of energy transition technologies.