Everything Investors Should Know About The Lithium ETF (LIT)

Lithium (Li) is a soft, silver-white metal belonging to the alkali metal group of chemical elements. It’s the world’s lightest metal, as well as the least dense solid element. It’s also the key element in Lithium-ion (Li-ion) batteries, a type of rechargeable battery commonly found in electric cars, as well as cell phones, laptops, cameras, and power tools, among other things.

While over 60% of the current demand for lithium comes from industrial applications like glass, ceramics, lubricants, and casting powders, much of the future expected demand for the metal will likely stem from the rechargeable battery market. You may be wondering how to reap the rewards from this booming industry, and a fund like Global X Lithium ETF (AX:LIT) may be the perfect tool to do so.

What is LIT?

The Global X Lithium ETF is a targeted thematic play on lithium and batteries. It focuses on investing in the full lithium cycle, from mining and refining the metal all the way to battery production.

It also seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Lithium Index.

LIT’s holdings come from countries all over the world, including the U.S., Australia, Chile, and Taiwan, among others. The sectors each companies fall in are wide ranging as well, from electrical components and diversified chemicals to commodity chemicals, specialty mining, and electric vehicle production.

The Numbers

LIT’s current net assets stand at $107.26 million, with an annual distribution frequency of 0.19%. It's average daily volume is $3.63 million, while its weighted average market cap is $7.23 billion. The majority of its portfolio is in its top 10 holdings, which currently include:

• FMC Corp. (NYSE:FMC) at 20.77%
• Quimica y Minera Chil-SP (NYSE:SQM) at 10.98%
• Orocobre Ltd OROCF at 7.16%
• Albemarle Corp. (NYSE:ALB) at 6.37%
• Samsung (KS:005930) SDI at 4.53%
• BYD Company (144A) at 4.36%
• Galaxy Rerouces Ltd at 4.30%
• Johnson Controls Inc. (NYSE:JCI) at 4.15%
• Simplo Technology Co. Ltd. at 4.10%
• Tesla Motors Inc. (NASDAQ:TSLA) at 3.98%

Launched on July 22, 2010, LIT is the only fund of its kind, giving investors exclusive coverage of the growing lithium sector. The fund is very concentrated, containing 25 small- to mid-cap holdings, and has an expense ratio of 0.77%.

It’s performed quite well so far this year, having gained almost 23% since the start of 2016, as well as outperforming the S&P 500, which has only gained 6.4% year-to-date.

For more information on lithium, its applications, and how to invest, check out these Zacks articles: “Beyond Tesla: 2 Lithium Stocks to Buy Now,” “How to Invest in Lithium,” and “So, What Actually is Tesla’s Gigafactory?”

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