In this article, we discuss 10 best lithium ETFs. If you want to skip our detailed discussion on the lithium industry, head directly to 5 Best Lithium ETFs.
In 2022, China witnessed a 70% rise in vehicle battery demand, accompanied by an impressive 80% surge in electric car sales compared to 2021. However, this increased battery demand was slightly tempered by the growing presence of plug-in hybrid electric vehicles (PHEVs). The United States, on the other hand, experienced an approximate 80% growth in battery demand for vehicles, despite electric car sales increasing by only about 55% in 2022. This surge in battery demand contributes to the increased need for essential materials, as reported by the International Energy Agency. During 2022, the demand for lithium exceeded its supply, a trend that continued from 2021. Interestingly, even with a 180% production increase since 2017, there remained a gap. In 2022, roughly 60% of lithium demand, 30% of cobalt demand, and 10% of nickel demand were attributed to electric vehicle batteries. As observed with lithium, the mining and processing of these essential minerals must escalate to aid the energy transition. This acceleration is required not just for electric vehicles, but also to match the growing demand for clean energy technologies in general. Lithium iron phosphate battery technology has become increasingly popular over the last decade. Nearly 95% of LFP batteries for electric light-duty vehicles were used in vehicles made in China, with BYD accounting for half of this demand. Tesla, Inc. (NASDAQ:TSLA), on the other hand, made up 15% of this market. Tesla, Inc. (NASDAQ:TSLA)’s use of LFP batteries grew from 20% in 2021 to 30% in 2022.
Electric vehicle manufacturers are optimistic about the anticipated surge in lithium supply, which could ease the strain on their expansion strategies following a two-year period of scarcity. The unexpectedly high demand for lithium, fueled by booming global electric vehicle sales, has led to a doubling of consumption in just the last two years. Suppliers have struggled to match this pace, resulting in a steep price surge. In fact, the combined spot value of lithium consumption surged to around $35 billion in 2022, a significant jump from the $3 billion recorded in 2020, as perBloomberg.
According to Reuters, the turning point for lithium prices occurred towards the end of 2022. This change was triggered by a slowdown in electric vehicle demand within China, in anticipation of Beijing's planned reduction in subsidies for the substantial $87 billion electric vehicle industry – the largest and fastest-growing globally. While concerns about demand have stirred market uncertainties, experts suggested in the first quarter of 2023 that the expected increase in supply from China, Australia, and Chile would play a key role in restoring more balanced prices.
A CNBCreport in the first quarter suggested that 2023 might see a surplus of lithium. This is due to the anticipation that higher supply volumes will outpace the declining demand for the metal. Matty Zhao, Head of Asia Pacific Basic Materials at Bank of America Securities, shared this insight. She commented:
“We see a lot of supply coming out from lithium mines ... We are expecting 38% lithium supply growth this year. That’s why 2023 is likely to turn into a surplus year for lithium.”
Zhao also indicated an expectation for a slowdown in China's electric vehicle demand growth, moving from 95% last year to 22% this year. This is significant as lithium is a key component in electric vehicle batteries, contributing to a rapidly evolving and increasingly competitive industry. In May of the previous year, The Goldman Sachs Group, Inc. (NYSE:GS) predicted that the supply of lithium would experience an average annual growth of 33% from 2022 to 2025.
According to Fortune Business Insights, the global lithium market was valued at $37.8 billion in 2022. Projections indicate that the lithium market will grow to $89.9 billion in 2030 at a CAGR of 22.1% from 2023 to 2030. The rising popularity of hybrid and electric vehicles, alongside the demand for energy-intensive portable electronics and storage systems, has greatly fueled the market's expansion. The increasing awareness regarding electric vehicles is linked to growing concerns about environmental pollution, as these vehicles contribute to reducing carbon emissions. Electric vehicles are highlighted as an environmentally friendly choice, emitting fewer greenhouse gasses than regular vehicles throughout their lifespan. Tesla, Inc. (NASDAQ:TSLA) is working on advanced EV batteries, particularly focusing on lithium iron phosphate batteries. This move is aimed at reducing vehicle costs, increasing the vehicle's range to over 400 miles, and potentially extending battery lifespan to 1 million miles. The Asia Pacific region is expected to have the biggest share in the lithium market, largely due to its extensive use across various sectors like power, consumer electronics, chemicals, industry, manufacturing, and more. Moreover, the presence of numerous companies producing lithium and its derivatives in countries like India, Taiwan, Japan, South Korea, and China is driving up the demand for these products.
This article discusses some of the best performing lithium ETFs that provide investors with access to stocks like Albemarle Corporation (NYSE:ALB), Rivian Automotive, Inc. (NASDAQ:RIVN), and First Solar, Inc. (NASDAQ:FSLR).
Our Methodology
We used an ETF screener and filtered out the best performing lithium ETFs based on their 5-year performance. We have also discussed the top holdings of the ETFs to offer better insight to potential investors. These ETFs have amassed significant gains in the past 5 years. The list is ranked in ascending order of the 5-Year performance of these lithium ETFs as of September 4, 2023.
10. WisdomTree Battery Value Chain and Innovation Fund (BATS:WBAT)
5-Year Performance as of September 4: -18.89%
1-Month Performance as of July 31: 5.06%
The WisdomTree Battery Value Chain and Innovation Fund (BATS:WBAT) seeks to replicate the price and yield performance of the WisdomTree Battery Value Chain and Innovation Index. This index is designed to monitor the progress of companies primarily engaged in battery and energy storage solutions, provided they meet the Index's eligibility criteria. The fund was introduced on February 17, 2022. As of September 1, 2023, the fund's assets reached $4.8 million, along with an expense ratio of 0.45%. It holds a portfolio of 140 stocks. As of July 31, 2023, the underlying benchmark's 1-month returns stood at 5.05%, while WisdomTree Battery Value Chain and Innovation Fund (BATS:WBAT) returned 5.06% over the same period. Similarly, year-to-date through July 2023, the WisdomTree Battery Value Chain and Innovation Index returned 14.10%, and the ETF closely followed its benchmark at 13.87%. This makes WisdomTree Battery Value Chain and Innovation Fund (BATS:WBAT) one of the top lithium ETFs to consider.
Joby Aviation, Inc. (NYSE:JOBY) is the largest holding of the WisdomTree Battery Value Chain and Innovation Fund (BATS:WBAT). Joby Aviation, Inc. (NYSE:JOBY) is a company fully engaged in air mobility, from creation to operation. They are focused on crafting electric vertical takeoff and landing aircrafts tailored for offering air transportation as a service. The goal is to develop an aerial ridesharing service and an app-based platform for easy ride booking.
According to Insider Monkey’s second quarter database, 16 hedge funds were bullish on Joby Aviation, Inc. (NYSE:JOBY), compared to 15 funds in the prior quarter. Like Albemarle Corporation (NYSE:ALB), Rivian Automotive, Inc. (NASDAQ:RIVN), and First Solar, Inc. (NASDAQ:FSLR), Joby Aviation, Inc. (NYSE:JOBY) is one of the top stocks on the radar of smart investors.
Amplify Lithium & Battery Technology ETF (NYSE:BATT), categorized as one of the best lithium ETFs, represents a collection of companies that derive substantial revenue from various aspects of lithium battery technology. This includes battery storage solutions, battery metals and materials, and electric vehicles. The aim of Amplify Lithium & Battery Technology ETF (NYSE:BATT) is to achieve investment outcomes that align with the EQM Lithium & Battery Technology Index. The ETF was introduced on June 6, 2018. As of September 1, 2023, the fund holds net assets valued at $140.6 million and maintains an expense ratio of 0.59%. Its investment portfolio comprises 111 stocks. Amplify Lithium & Battery Technology ETF (NYSE:BATT) made it to our list of the best lithium ETFs since it tracks the performance of its underlying index closely. Year-to-date as of August 31, 2023, the ETF's returns came in at 4.74%, while the underlying index returned 4.88%.
BHP Group Limited (NYSE:BHP) is one of the top holdings of Amplify Lithium & Battery Technology ETF (NYSE:BATT). It functions as a resource company with operations spread worldwide. The company's activities are divided into three segments – Copper, Iron Ore, and Coal. It is involved in the extraction of various valuable elements like copper, silver, zinc, lithium, molybdenum, uranium, gold, iron ore, as well as metallurgical and energy coal.
According to Insider Monkey’s second quarter database, 23 hedge funds were bullish on BHP Group Limited (NYSE:BHP), compared to 24 funds in the previous quarter. Ken Griffin’s Citadel Investment Group is the largest position holder in the company, with 1.8 million shares worth $105.9 million.
Here is what Harding Loevner has to say about BHP Group Limited (NYSE:BHP) in its Q1 2021 investor letter:
“Our purchase of Australian mining company BHP is an example of a quality company at a moderate valuation that should deliver attractive long-term returns. We believe the market has undervalued its enduring competitive advantage due to its low cost iron and copper mining operations which has allowed the company to deliver consistent profits and cash flows across the inevitable ups and downs of the global metals cycle. While the variability of commodity prices prevents BHP from scoring in the top ranks of measured quality, we are willing to bear some of that uncertainty in return for a more attractive valuation given the company’s strong business fundamentals.”
Next on our list of the best lithium ETFs is the VanEck Rare Earth/Strategic Metals ETF (NYSE:REMX), which aims to closely match the price and yield performance of the MVIS Global Rare Earth/Strategic Metals Index. This index is designed to reflect how companies involved in producing, refining, and recycling rare earth and strategic metals and minerals are doing overall. The ETF launched on October 27, 2010. As of September 1, 2023, the fund holds net assets totaling $526.03 million, featuring an expense ratio of 0.54%. Currently, the ETF's portfolio includes 34 stocks.
Livent Corporation (NYSE:LTHM) is one of the largest holdings of the VanEck Rare Earth/Strategic Metals ETF (NYSE:REMX). Livent Corporation (NYSE:LTHM) produces and markets high-performance lithium compounds used in lithium-based batteries, specialized polymers, and chemical synthesis applications across North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific region.
According to Insider Monkey’s second quarter database, 31 hedge funds were bullish on Livent Corporation (NYSE:LTHM), in contrast to the preceding quarter when 32 funds had invested in the stock. Ken Griffin’s Citadel Investment Group held a significant position in the company, with 2.2 million shares valued at $59.7 million.
Carillon Eagle Small Cap Growth Fund made the following comment about Livent Corporation (NYSE:LTHM) in its Q4 2022 investor letter:
“Livent Corporation (NYSE:LTHM) is a pure-play, fully integrated producer of performance lithium compounds. The stock underperformed amid investor concerns about how a potential decelerating rate of growth in overall electric vehicle (EV) production and demand, primarily in China, would affect the future price of lithium. Despite these potential near-term headwinds, longer-term the global lithium market remains tight, and we believe Livent plays a critical role in the battery value chain and remains well- positioned for the overall continued global adoption of EVs.”
7. Horizons Global Lithium Producers Index ETF (TSE:HLIT)
5-Year Performance as of September 4: 28.87%
Horizons Global Lithium Producers Index ETF (TSE:HLIT) aims to mirror, as much as possible and after accounting for costs, the results of the Solactive Global Lithium Producers Index. The index aims to capture the performance of worldwide publicly traded companies involved in mining and/or producing lithium, lithium compounds, and related components. The ETF was launched on June 22, 2021. As of September 1, 2023, the fund’s net assets totaled C$29 million, and its portfolio encompasses 30 stocks. The ETF features an expense ratio of 0.85%. Horizons Global Lithium Producers Index ETF (TSE:HLIT) is one of the best lithium ETFs to watch.
Sigma Lithium Corporation (NASDAQ:SGML) is one of the top holdings of Horizons Global Lithium Producers Index ETF (TSE:HLIT). Sigma Lithium Corporation (NASDAQ:SGML) is involved in exploring and developing lithium deposits in Brazil. These properties include multiple mineral rights, spread across around 185 square kilometers in the Ara?uaí and Itinga regions of Minas Gerais, Brazil. Sigma Lithium Corporation (NASDAQ:SGML) serves the global electric vehicle industries.
According to Insider Monkey’s second quarter database, 12 hedge funds were bullish on Sigma Lithium Corporation (NASDAQ:SGML), compared to 14 funds in the previous quarter. Israel Englander’s Millennium Management held the largest position in the company, with 496,165 shares worth $19.99 million.
ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) is an ETF that is actively managed with the goal of achieving steady capital growth, while closely matching the performance of the S&P 500 Index and the MSCI World Index. It does this by investing in both local and global equity securities of companies working in autonomous technology and robotics. These companies are carefully chosen to align with the fund's main focus on disruptive innovation. The companies under ARK Autonomous Technology & Robotics ETF (BATS:ARKQ) are ones that are geared towards benefiting from creating new products or services, improving technology, and making strides in scientific research, especially in fields like energy, automation and manufacturing, materials, artificial intelligence, and transportation. The ETF was launched on September 30, 2014. As of July 31, 2023, the fund holds assets worth around $1.17 billion, and its expense ratio is 0.75%. Its portfolio consists of 30 to 50 stocks.
Tesla, Inc. (NASDAQ:TSLA) is the largest holding of the ARK Autonomous Technology & Robotics ETF (BATS:ARKQ). Tesla, Inc. (NASDAQ:TSLA) is responsible for the design, development, manufacturing, leasing, and sale of electric vehicles, along with systems for creating and storing energy. The company has two main segments – Automotive, and Energy Generation and Storage.
According to Insider Monkey’s second quarter database, 79 hedge funds were bullish on Tesla, Inc. (NASDAQ:TSLA), in contrast to the last quarter when 82 funds had invested in the stock. In addition to Albemarle Corporation (NYSE:ALB), Rivian Automotive, Inc. (NASDAQ:RIVN), and First Solar, Inc. (NASDAQ:FSLR), Tesla, Inc. (NASDAQ:TSLA) is one of the top stocks favored by elite hedge funds.
Baron Opportunity Fund made the following comment about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2023 investor letter:
“Tesla, Inc. (NASDAQ:TSLA) designs, manufactures, and sells EVs, related software and components, and solar and energy storage products. Following a sharp decline at the end of 2022, Tesla’s stock rebounded in the first quarter of 2023 on investor expectations that Tesla will continue to grow vehicle deliveries and maintain solid gross and operating margins despite a potential recession, competition in China, and vehicle price reductions. We wrote a long piece on Tesla last quarter and refer readers back to it, because for long-term investors not much has changed over the last three months. Tesla did hold its first Investor Day in March, and several Baron analysts and portfolio managers attended. We toured the Austin Gigafactory, drove in a Cybertruck, boarded a Semi truck, and spoke with a wide swath of Tesla senior managers. During the formal presentation, Tesla highlighted, among other things: (1) its broad and deep bench of executive talent supporting CEO Elon Musk; (2) its “Master Plan 3–Sustainable Energy for All of Earth,” which featured EVs, renewable power from solar and wind, and stationary electric storage; (3) its vehicle assembly innovations, including massive casted parts (building Model Y bodies with single front and rear castings, replacing a substantial number of parts and fastening steps), a stainless steel exoskeleton (for Cybertruck), and its next-generation highly efficient “unboxed process” for its next-gen $25,000 vehicle; (4) a future permanent[1]magnet electric motor that will not require any rare earths; and (5) the massive untapped market opportunity for commercial stationary electric storage, branded Megapack, as the world steadily shifts to renewable energy. As long-term shareholders, we have witnessed Tesla exploit its innovative Model 3/Y now-global mass-market platform to increase vehicle deliveries from barely a standing start to over 1.3 million units, while achieving industry-leading margins and reinforcing its iron-clad balance sheet to almost $23 billion in cash (and effectively no recourse debt). We expect Tesla’s next-generation EV and Megapack products to have a similar impact on company results.”
