On the morning of Friday, Aug. 27, representatives of exchange-traded fund (ETF) issuer Global X Funds were granted the honor of ringing the opening bell at the New York Stock Exchange. The event was a celebration of sorts for the company’s latest bevy of recently released ETFs. One of those new ETFs has more than proven itself worthy of a celebration, and that’s the Global X Lithium ETF (NYSE: LIT).
The fund has been a Wall Street sensation since it began trading on Aug. 4, when it opened up at $17.29 per share. The fund closed at $19.88 on Oct. 20, representing a total return of over +15% in just 11 weeks.
According to the company, the Global X Lithium ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Lithium Index. What’s the Solactive Global Lithium Index? Well, it’s an index that tracks the performance of the largest and most liquid listed companies in the exploration and/or mining of Lithium, or the production of Lithium batteries.
Fund Details
Fund Inception: July 23, 2010
Ticker: LIT
CUSIP: 37950E762
Stock Exchange: NYSE Arca
Total Expense Ration: 0.75%
Number of Holdings: 20
This fund is interesting in that it’s a commodities play in one of the hottest “green” commodities out there—the Lithium that helps power the batteries used in electric and hybrid cars. This fund isn’t a pure play on Lithium. Rather, it’s more like a clean-tech play, as LIT has exposure to many of the sector’s biggest names in the space.
The top five holdings in the fund include: Sociedad Quimica Minera ADR (NYSE: SQM), 22.51%, FMC Corp. (NYSE: FMC), 15.63%, Rockwood Holdings (NYSE: ROC), 7.94%, Ener1 (NASDAQ: HEV), 4.75% and SAFT Groupe S.A. (PINK: SGPEY), 4.61%. The top five country allocations are the United States, 49%, Chile, 20%, Japan, 10%, Canada, 6%, and France, 5%.
So, what’s driven the price of LIT so high since the fund began trading? One reason is the investing public’s healthy appetite for commodities of all sorts. Gold and silver are booming, and now specialty metals like Lithium also are soaring. But the real force behind LIT’s rise is the expectations of more and more electric and hybrid vehicles on the road. According to a recent forecast by The National Highway Safety Commission, nearly 20% of all automobiles in the U.S. will be running on some sort of a hybrid mechanism by 2015.
The federal government is behind this push toward electric and hybrid cars, with some $2 billion in Recovery Act spending pegged to go to advanced batteries production, and nearly $25 billion designated for programs to nudge car makers to retool their operations and make more fuel-efficient vehicles.
If you combine the government’s clean vehicle push with huge expected demand down the road, along with a lot of heavy technical buying in LIT, you get an ETF that could continue powering up investors’ portfolios.
LIT Holdings as of 10/20/10
% of Net Assets Name
22.51 SOC QUIMICA Y MINERA ADR (NYSE: SQM)
15.63 FMC CORP (NYSE: FMC)
7.94 ROCKWOOD HOLDINGS INC (NYSE: ROC)
4.75 ENER1 INCORPORATED (NASDAQ: HEV)
4.61 SAFT GROUPE S.A. (PINK: SGPEY)
4.55 ADVANCED BATTERY TECH. NASDAQ: ABAT)
4.21 AVALON RARE METALS INC (TSE: AVL)
4.04 GS YUASA CORP (TYO: 6674)
3.63 A123 SYSTEMS INC (NASDAQ: AONE)
3.55 EXIDE TECHNOLOGIES (NASDAQ: XIDE)
3.22 VALENCE TECH INC. (NASDAQ: VLNC)
3.19 GALAXY RESOURCES LTD (ASX: GXY)
3.10 JAPANESE YEN (NYSE: FXY)
2.89 CHINA BAK BATTERY INC (NASDAQ: CBAK)
2.68 COSLIGHT TECHNOLOGY INT’L (HKG: 1043)
2.60 ULTRA LIFE BATTERIES INC (NASDAQ: ULBI)
1.72 ELECTROVAYA INC (TSE: EFL)
1.66 SANYO ELECTRIC (PINK: SANYY)
1.64 OROCOBRE LTD (PINK: OROCF)
1.25 CANADA LITHIUM CORP (TSE: CLQ)
0.72 LITHIUM ONE INC (PINK: LITHF)
0.07 AUSTRALIAN DOLLAR (NYSE: FXA)
