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Highlights
- While cherry-picking quality companies, one requires a certain level of knowledge and experience in investing.
- ETFs allow an investor to buy a readymade portfolio of securities that are managed by a dedicated fund manager.
- ACDC has delivered an 18.94% total return (as of 19 April 2022) since its inception on 30 August 2018.
The EV revolution is picking up steam across the globe. According to a recent article by the World Economic Forum, global EV sales surged 80% in 2021. Many countries have already decided to phase out internal combustion engine-driven (ICE) vehicles, with Germany setting an aggressive target to completely phase them out by 2030.
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To ride this EV wave, many companies are venturing into lithium production, developing higher capacity batteries, etc. However, cherry-picking quality companies requires some level of knowledge and experience in investing which might be out of reach for an average retail investor. For them there is a better and easier way to invest – via ETFs.
ETFs allow an investor to buy a readymade portfolio of securities that are managed by a dedicated fund manager. Let us have a look at an ETF that allows investors to specifically bet on the EV space.
ETFS Battery Tech & Lithium ETF (ASX:ACDC)
Issued by ETFS Management (AUS) Limited, this ETF offers investors a wide exposure to globally listed companies that are directly or indirectly powering the EV revolution. These companies deal with energy storage and production, playing part in the supply chain management of battery production, lithium mining, etc.
ACDC tracks the Solactive Battery Value-Chain Index, provided by Solactive AG. Companies in ACDC are equally weighted, i.e., each holds accounts for the same weightage in the portfolio at each semi-annual rebalance and hence contributes equally to the overall portfolio performance.
The current net asset value (NAV) of one unit of the ETF is AU$84.27 (as of 19 April 2022). The total asset under management (AUM) stands at AU$510.77 million with 6.06 outstanding units. The management fee of the fund is 0.69% per annum.
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Portfolio construction
Mineral Resources is the top holding of the portfolio accounting for 6% of the total allocation, followed by AMG Advanced Met which has a 5.4% allocation. Other companies that come under the top 10 holdings are – Lockheed Martin (5%), Pilbara Minerals (4.5%), Hyundai Electric (3.5%), Sebang Global BA (3.5%), etc.
Coming to the sector-wise allocation, the industrial and consumer discretionary sectors together account for more than half of the portfolio allocation (representing 36.6% and 26.3% allocations, respectively).
Looking at the country-wise allocation, ACDC has more investments in the US (21.8%) and Japan (21.1%). Investments in Australia stand at around 10.5% of the total portfolio, while Canadian companies hold the least investment, at around (2.1%).
Fund performance
This ASX ETF has delivered a negative return of 4.33% in the last one year (ended 19 April 2022), while the benchmark index was down 3.56%. However, since its inception on 30 August 2018, the ETF has offered an 18.94% total return while the benchmark index has yielded 19.87% return.
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