Battery ETFs under pressure on rising prices of materials

Looming rate hikes and the escalating Russia-Ukraine war has raised investors' concerns regarding the outlook of the battery supply chain and demand for electric vehicles. Prices of ley metals used in the production of batteries such as copper, cobalt, nickel, and lithium have soared on supply disruptions that lingered in the post-pandemic recovery and the recently imposed sanctions on Russia — a key producer of these metals.

Battery Value-Chain ETFs see shy new inflows

Consequently, investments into Battery Value-Chain ETFs have been weak this year with a meagre $51 million of net inflows registered. That is minuscule compared to the staggering $2.6 billion of net inflows registered during the same period last year. The largest ETF in that space, the Global X Lithium & Battery ETF (LIT) has witnessed outflows of -$114 million in 2022. The fund seeks to track the Solactive Global Lithium Index and invests in companies engaged in the lithium cycle, such as miners, refineries and battery producers. The fund's share price fell by -20% this year and by -7.5% since the war erupted in Ukraine. For interested investors, LIT trades on the NYSE Arca and has a total expense ratio of 0.75%.

Other Battery Value-Chain ETFs available in America include Amplify Lithium & Battery Technology ETF (BATT), Horizons Global Lithium Producers Index ETF (HLIT), and WisdomTree Battery Value Chain and Innovation Fund ETF (WBAT).

European Investors add around $95 million into L&G's Battery ETF

Meanwhile, European investors added $95 million this year into the L&G Battery Value-Chain UCITS ETF (BATT). However, the overall net inflows in Europe-domiciled Battery Value-Chain ETFs were only $53 million as investors pulled out -$44 million from the WisdomTree Battery Solutions UCITS ETF (W1TA).

The L&G Battery Value-Chain UCITS ETF (BATT) seeks to track the Solactive Battery Value-Chain Index and invests in companies that are providers of certain electrochemical energy storage technologies and mining companies that produce metals used to manufacture batteries. BATT has a total expense ratio of 0.49% and trades on multiple European exchanges, including the London Stock Exchange (BATG, GBP or BATT, USD), the Borsa Italiana (BATT, EUR), the Euronext (BATT, EUR), the Deutsche Börse (BATE, EUR), and the SIX Swiss Exchange (BATT, CHF). BATT share price dropped by -16.5% this year and -10% since the Russian invasion began.

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