ETC provider Global Palladium Fund announces the launch of the Global Palladium Fund Physical Electric Vehicle Metals ETC.
The firm writes that metals are essential to the energy transition and critical materials for electric vehicles and that this new ETC provides investors with a simple and cost-effective way of accessing these metals, bringing potential diversification and inflation-hedging benefits to portfolios.
The ETC is backed by physical metal and will track the performance of the Solactive GPF Electric Vehicle Index. The bespoke index is made up of metals based on their use across four electric vehicle segments: battery (BEV), hybrid (HEV), plug-in hybrid (PHEV) and fuel cell (FCEV).
Metals weights (capped at a maximum of 40 per cent) in the index basket are: Copper (40 per cent), Palladium (28.13 per cent), Nickel (18.65 per cent), Cobalt (11.45 per cent), and Platinum (1.77 per cent), with metals stored in LME warehouses in Rotterdam and LPPM vaults in London and Switzerland. The index will be rebalanced annually in July to reflect evolving use of metals across the different segments and includes the scope to introduce additional metals subject to use and availability.
“The growth in consumer appetite for electric vehicles in recent years has been phenomenal, and we are just at the start of this mega trend to replace the internal combustion engine. When approaching this theme, it can be hard for investors to know which equities to select, particularly when valuations are stretched and it is unclear which technologies or companies will be the winners. GPF is providing investors with an innovative physically-backed solution that offers a unique and diversified risk and return profile compared to traditional equity-based investments,” says Alexander Stoyanov, Global Palladium Fund CEO.
“We are particularly excited that it’s the first time a physically-backed basket of metals including base metals such as cobalt, copper and nickel, is being made available to investors. At a time when investors are looking for diversification, the GPF Physical Electric Vehicle Metals ETC provides simple and transparent access to key metals used in electric vehicles. Exposure to the metals will help investors to hedge price risk as competition for access to key raw materials gathers pace,” explains Timothy Harvey, Head of Business Development at Global Palladium Fund.
The Global Palladium Fund Physical Electric Vehicle ETC is being launched with USD10 million of seed capital, and listing initially on Borsa Italiana. Listings on Deutsche Börse, London Stock Exchange and SIX will be announced in the coming weeks. It will have a Total Expense Ratio (TER) of 0.80 per cent.