NEW YORK (TheStreet) -- One month ago, Global X announced the latest addition to its ETF product lineup, the Global X Lithium ETF (LIT) - Get Report, giving investors an easy way to play the metal and it has been a hit.
Since its inception, LIT has topped $20 million in assets and regularly sees daily trading volume north of a million shares. LIT carries an expense ratio of 0.75%, holds 20 securities, all of which are engaged in some aspect of lithium, including mining, exploration and lithium-ion battery production. According to LIT's fact sheet, it allocates nearly 23% of its assets to the Chilean giant SQM, nearly 16.7% to
, and 7.8% to
which is a major lithium compound producer. Also, 51% of the ETF's assets are allocated to lithium mining and processing and 49% to the lithium-ion industry.
One of the reasons LIT has been a hit among investors is the overall attractiveness and multiple uses of the metal. Lithium is one of the most important natural resources in the world, and can be found in cell phones, aircraft parts, nuclear weapons and medical applications, just to name a few.
Additionally, lithium plays a vital role in the alternative energy sector. The metal has the capacity to store electric energy more efficiently than any other metal, which is essential in generating solar and wind power, as well as powering electric and hybrid cars, like those of
Lastly, lithium is already being used in numerous consumer products in the form of lithium batteries. Nearly 90% of all laptops use lithium-ion batteries and more than 60% of cell phones utilize the batteries.
As for the future, new technological advances, continuing innovation and the emerging electric transportation sector are likely to support demand for the metal.
Although an opportunity seems to exist in lithium, there are inherent risks involved with investing in a commodity-based ETF. To help mitigate these risks, the use of an exit strategy is of importance. Such a strategy can be found at
Written by Kevin Grewal in Houston, Tx
Kevin Grewal is the founder, editor and publisher of
ETF Tutor and serves as the editor at
www.SmartStops.net , where he focuses on mitigating risk and implementing exit strategies to preserve equity. Additionally, he is the editor at The ETF Institute, which is the only independent organization providing financial professionals with certification, education, and training pertaining to exchange-traded funds (ETFs). Prior to this, Grewal was a quantitative analyst at a small hedge fund where he constructed portfolios dealing with stock lending, exchange-traded funds, arbitrage mechanisms and alternative investments. He is an expert at dealing with ETFs and holds a bachelor's degree from the University of California along with a MBA from the California State University, Fullerton.