Best Lithium ETFs

Lithium is used in consumer electronics and can become more important in the future. The mineral is an important component that makes up electric vehicles (EVs) and renewable energy. It is also an essential resource for efforts to reduce the world’s carbon. The mineral’s limited supply and complicated extraction process can create supply issues that further drive up the price. Investors cannot buy lithium as a commodity, but they can invest in lithium exchange-traded funds (ETFs) that offer broad exposure. 

5 Best Lithium ETFs to Invest in Now

Lithium ETFs diversify your capital across several companies that stand to benefit from the rising demand for lithium. These are some of the top lithium ETFs to explore.

1. Global X Lithium & Battery Tech ETF (NYSEARCA: LIT)

The Global X Lithium & Battery Tech ETF invests in all stages of the lithium cycle. The fund gives investors exposure to miners, battery producers, EVs and other companies that benefit from the rising demand for lithium. The fund pays a semi-annual dividend and has 40 holdings. The fund has achieved an annualized return of 16.35% over the past five years and has an expense ratio of 0.75%. The ETF’s top three holdings are Albemarble (9.44%), Tesla (6.95%) and Rivian (5.74%).

2. Amplify Lithium and Battery Technology ETF (NYSEARCA: BATT)

The Amplify Lithium and Battery Technology ETF gives investors exposure to 103 stocks and has a 0.59% expense ratio. The fund has positioned itself to benefit from the rising demand of the lithium-ion battery market with a focus on battery storage solutions, battery metals and materials and EVs. The fund’s top three holdings are Tesla (10.44%), BHP Group (6.29%) and BYD (6.27%). Most of the company’s assets are large caps (market caps above $10 billion). The fund has generated annualized returns of 15.57% over the past three years.

3. First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQGM: QCLN)

This ETF only invests in companies that are technology manufacturers, developers, distributors, or installers of advanced materials, energy intelligence, renewable energy and energy storage. The fund has a 0.58% expense ratio and has Tesla (9.70%), ON Semiconductor Corp. (8.50%) and Albemarle (8.36%) as its top three holdings. The largest industry is renewable energy equipment (25.09%), with automobiles (18.50%) and semiconductors (18.24%) in second and third. The fund has only returned an annualized 6.45% since its 2007 inception, but the annualized return over the past five years is 22.09%.

4. iShares Global Clean Energy ETF (NASDAQ: ICLN) 

The iShares Global Clean Energy ETF gives investors exposure to companies that produce energy from renewable sources, such as solar and wind. The fund has generated a 17.43% annualized return over the past five years and has an expense ratio of 0.40%. The ETF distributes a semi-annual dividend and holds onto 102 stocks. The top three holdings are First Solar (8.08%), Enphase Energy (7.86%) and SolarEdge Technologies (7.60%).  

5. VanEck Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX)

The VanEck Vectors Rare Earth/Strategic Metals ETF only invests in companies that generate at least 50% of total revenues from the rare earth/strategic metals industry. The fund has a 0.54% expense ratio and has generated an annualized 38.02% return over the past three years. The company’s top three holdings are Pilbara Minerals (8.70%), Zhejiang Huayou Cobalt (7.52%) and China Northern Rare Earth Group H-T (6.85%).

What is a Lithium ETF?

A lithium ETF gives you exposure to mining companies, processing companies and other entities that benefit from the rising price of lithium. Rather than investing in lithium directly, ETFs let you invest in various companies that depend on the strong demand for lithium to report strong revenue and earnings growth. 

Lithium ETFs reduce your risk while investing in this resource. If one company reports bad earnings and isn’t able to capitalize on a lithium boom, other companies in the ETF may prop up the fund’s share price. 

Why Invest in Lithium ETFs?

Lithium is a volatile asset that can become a big hit if EVs and renewable energy solutions continue to gain momentum. You cannot invest in lithium as a commodity, but it’s possible to buy ETFs that invest in several lithium stocks.

Buying a lithium ETF requires less work, research and oversight than buying individual shares of lithium stocks. You can save time with a lithium ETF and get exposure to various companies.

Where to Invest in Lithium ETFs

The broker you use can impact your financial journey. Each broker has different rules on fees and various features available for investors. Individuals who want to add lithium ETFs to their portfolios may want to consider one of these brokers.

Get Exposure to Lithium with Lithium ETFs

Lithium ETFs give investors exposure to several companies that benefit from the rising popularity of lithium. This mineral is essential for renewable energy, EV batteries and the future of electric vehicles. The mineral has many applications. Investors seeking to diversify their portfolios and get exposure to lithium may want to consider lithium ETFs.

Frequently Asked Questions 

Best Lithium ETF Methodology

The best lithium ETF methodology involved looking for ETFs that focused on lithium and its applications. The analysis included looking for lithium-centric business models, such as mining companies, lithium-ion battery producers and EV companies.