Investors pour in ETFs ‘driving the future’ as Biden administration firms up climate change policies

From

Kanish Chugh

One of Australia’s top-performing exchange traded funds, ETF Securities’ ETFS Battery Tech & Lithium ETF, has a portfolio positioned at the centre of fast-paced action on climate under the new Biden administration in the United States.

Last week, US President Joe Biden announced that the US government will replace its fleet of 650,000 vehicles with electric models.

Since coming to office, President Biden has committed the US to re-join the Paris Climate Agreement and given an undertaking to achieve 100 per cent clean energy and net-zero emissions no later than 2050.

ETF Securities Head of Distribution Kanish Chugh says: “In the past few months alone, we have seen a surge of investors come into ACDC. This high performing ETF offers exposure to global companies developing electro-chemical storage technology, mining companies producing battery-grade lithium and manufacturers of electric vehicles.”

ACDC’s unit price has increased by more than 50 per cent over the past year, making it one of the highest growth exchange traded funds on the Australian market, with over $128 million in funds under management (as at 8th Feb 2021).

Chugh says battery technology is central to the growth of renewable energy and electrical vehicle usage. Wind and solar energy are forecast to supply around 48 per cent of the world’s energy needs by 2050, while over half of all new passenger vehicles sold by 2040 will be electric vehicles.

Battery storage will need to be expanded by 300 times current capacity to meet expected 2050 requirements.

“The development of lithium-ion batteries has transformed industry, making batteries smaller, lighter, rechargeable and increasingly more affordable,” Chugh says. 

The top holdings in the ACDC portfolio include miners Pilbara Minerals and Galaxy Resources; car makers Tesla Inc, Renault SA and Nissan Motor Co; and lithium product makers GS Yuasa Corp, Livent Corp and AMG Advanced Metallurgical Group. 

President Biden plans to take legislation to Congress that will set targets for large investment in clean energy, climate research and innovation. He also plans to introduce incentives to encourage the rapid adoption of clean energy innovations across the US economy.

Biden has said he will “rally the rest of the world to meet the threat of climate change.”

“With the changes planned for the US economy, and the impact they will have in other countries, there is a clear-cut case for investing in the themes driving the future, which is where the ACDC fund is positioned,” Chugh says.

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