ProShares launches thematic mining ETF

Dec 7th, 2022 | By | Category: Equities

ProShares has launched a new thematic equity ETF targeting mining companies supplying key metals used in the production of batteries.

ProShares launches thematic ETF targeting battery metal miners

Battery demand is expected to grow by 25% annually until the end of the decade.

The ProShares S&P Global Core Battery Metals ETF (ION US) has been listed on NYSE Arca with an expense ratio of 0.58%.

The fund is positioned to benefit from the increasing demand for energy storage devices used across modern, in-demand technologies such as electric vehicles, laptops, and smartphones. According to a recent Global Battery Market Report, worldwide demand for batteries is expected to grow by 25% annually until at least 2030.

Michael L. Sapir, Founder and CEO of ProShares, said: “An energy revolution is underway that is transforming the way we power our lives. With ION, there is now an ETF that offers investors an effective way to access companies meeting the soaring demand for batteries and the metals needed to make them.”

The ETF tracks the S&P Global Core Battery Metals Index which selects its constituents from a universe of developed and emerging market stocks with market capitalizations above $100 million and average daily trading volumes greater than $1m.

The methodology screens for mining companies that were engaged in the production of cobalt, lithium, and nickel over the previous year.

Eligible constituents are ranked based on the percentage of revenue derived from the production of these battery metals. Each company is assigned a weight based on its rank with higher-ranked firms receiving a larger weight in the index.  The index is reconstituted annually and rebalanced on a quarterly basis.

As of the end of November, the index contained 41 constituents with the largest country exposures being Australia (21.9%), China (14.8%), South Africa (12.6%), Indonesia (9.8%), Canada (7.7%), and the US (7.3%). Virtually all the index weight was allocated to stocks from the materials sector.

Notable positions included Allkem (5.3%), Pilbara Minerals (5.2%), IGO (4.8%), Livent (4.6%), Sociedad Quimica Y Minera De Chile SA (4.4%), and Pacific Metals (4.4%).

ION is the first thematic ETF to focus on companies mining metals used in the development of batteries; however, rival issuer VanEck also offers a suite of thematic mining funds.

VanEck’s line-up includes the VanEck Green Metals ETF (GMET US), launched in November 2021, which targets companies mining key metals that are used in technologies for combatting climate change. The VanEck Rare Earth/Strategic Metals ETF (REMX US), meanwhile, focuses on companies mining rare earths and strategic metals used in a range of modern, advanced technologies.

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