KraneShares has announced the launch of the KraneShares Electrification Metals ETF (Ticker: KMET) on the New York Stock Exchange.
The firm writes that KMET offers broad coverage of the key metals needed for the electrification of the global economy. The Fund tracks the Bloomberg Electrification Metals Index, which is comprised of futures contracts on aluminium, copper, nickel, zinc, cobalt, and lithium. As the economy decarbonises, we expect to see massive demand for renewable energy, electrification, and battery storage. More than USD140 trillion of investment is needed for the clean energy transition over the next thirty years.
From Electric Vehicles (EVs) and batteries to renewable energy infrastructure, KMET offers exposure to the core metals expected to see strong demand from a range of electrification uses. Increased EV adoption has led to a growing demand for batteries, the key components of which include lithium, nickel, zinc, and cobalt. From 2020-2025, the global battery market could see a nearly five-fold increase in demand. While still a relatively new market, EV battery production is well-positioned to be a major growth opportunity for these metals as we continue to improve and streamline the battery supply chain.
Beyond batteries, copper and aluminium will also play an important role in the electrification of the global economy, the firm writes. Aluminium, a durable, lightweight material, can offset the weight of the EV’s larger battery and should see increased demand from the expansion of the EV market. Additionally, aluminium has application use in transmission and distribution grids and as a key material in solar panels and wind turbines. Among the most conductive metals, copper is used extensively for electrical wiring. EVs require more than twice as much copper than traditional cars. Moreover, copper is a core element in the wiring and cabling for various renewable energy technologies.
“Transitional commodities are expected to experience a supply and demand imbalance over the next decade,” says Luke Oliver, Head of Strategy at KraneShares. “These resources may be repriced depending on how they factor into the decarbonisation of the global economy. We believe now is the time to invest in these electrification metals as demand is poised to accelerate into the energy transition.”
“KMET is a timely expansion of the KraneShares Climate Investment suite, which has quickly evolved from our flagship KraneShares Global Carbon Strategy ETF (Ticker: KRBN) to include regional carbon markets, energy transition equities, and now electrification metals,” said Jonathan Krane, Chief Executive Officer at KraneShares. “We believe investors should have direct access to the global decarbonization investment opportunity. We are proud to launch the KraneShares Electrification Metals ETF (Ticker: KMET), which provides unique exposure to a key component of this opportunity and furthers KraneShares’ leadership in the space.”
“Our goal has always been to push development forward in providing new solutions for the world’s changing investment demands,” says Dave Gedeon Head of Product for Bloomberg’s Multi-Asset Index business. “Integrating unique research data alongside our established Bloomberg Commodity Benchmark, we are proud that KraneShares has adopted our electrification metals index for KMET to meet the thematic demand across the changing commodity markets.”