Element Funds Taps EV Batteries With First ETF Launch

Element Funds Taps EV Batteries With First ETF Launch

Fund seeks to tap rising demand for metals used in electric cars and power storage.

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Reviewed by: Zoya Mirza
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Edited by: Zoya Mirza

Element Funds, a newcomer to the exchange-traded fund industry focused on the renewable energy economy, launched its first ETF Thursday focusing on key elements that comprise the electric vehicle and energy storage markets. 

The actively managed Element EV, Solar & Battery Materials (Lithium, Nickel, Copper, Cobalt) Futures Strategy ETF (CHRG) will provide exposure to futures contracts of commodities such as lithium, cobalt, nickel and copper—elements deemed “necessary for the adoption of battery technology,” according to the fund’s prospectus.  

The new fund taps a growing trend of commodity ETF launches in 2022 focused on EV battery production. CHRG is at least the fourth ETF to join a line-up of funds dedicated to electric vehicle batteries.  

“There are trillions of dollars from investors seeking exposure to the EV sector and the larger renewable economy,” Element Funds CEO and co-founder Will McDonough wrote in an email to ETF.com. “Investors will participate in the upside from growing demand for these hard to supply elements.” 

The Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF (EVMT) was one of the first ETFs to pave the way in the EV battery commodities space, followed by the Harbor Energy Transition Strategy ETF (RENW) and the KraneShares Electrification Metals Strategy ETF (KMET). All of those funds launched this year, according to data from ETF.com. 

EV battery-focused launches are propelled by the surge in demand for electric vehicles. Battery-powered cars now comprise the fastest-growing segment of the car manufacturing industry, according to Cox Automotive’s Kelley Blue Book, despite the recent spike in EV battery prices

Since CHRG invests in metal commodities’ futures, it’s not exposed to price fluctuations based on demand for lithium, nickel, copper and other metals. It’s also not affected by factors such as political, operations and management risks attached to the mining of these raw materials, according to the fund’s prospectus.

“We are directly accessing the core commodities so as to not be exposed to any risk at a corporate or geographic level,” McDonough added. 

CHRG is listed on the NYSE Arca and comes with an expense ratio of 0.95%, according to the prospectus. 

Contact Zoya Mirza at [email protected] 

Zoya Mirza is a markets reporter at etf.com. Her work has appeared in USA Today, Voice of America, and United Press International, among others. Mirza is a graduate of Northwestern University’s Medill School of Journalism. Her past experiences include editorial work in book publishing and conducting political analysis for NGOs and think tanks. Mirza is a passionate bibliophile and collects vintage postcards from every bookstore she visits in a new city.