Lithium, the critical ingredient in the long-lasting batteries used to power hybrid cars, has been sparking interest among institutional investors. Launched on July 23, Global X Management’s lithium exchange-traded fund attracted nearly $25 million in six weeks — the fastest growth of any of New York–based Global X’s 14 commodity and country ETFs.
“What was surprising and very different about lithium,” says Bruno del Ama, Global X CEO, “was that we received a huge amount of inquiries [even before the launch], mostly from hedge funds.”
Lithium, of course, isn’t only for propelling energy-efficient vehicles. Lithium salts are the active ingredient of a mood-stabilizing drug. And because it is the lightest metal and has great energy-storage properties, lithium is a key element of batteries for laptops and cell phones. The bright prospects of hybrid vehicles are fueling heightened interest in the metal.
Global X’s lithium ETF is not a pure play on the commodity. Half of its 20 constituents are mining and refining companies, such as FMC Corp., while the other half are such lithium-battery makers as Advanced Battery Technologies. As with many ETFs categorized as green, “you have to be careful,” warns Deborah Fuhr, global head of ETF research for BlackRock. “People think they’re buying a [pure] commodity exposure.”
