WisdomTree writes that as trading volumes of both lithium and cobalt have picked up, there is now sufficient volume to introduce these two materials into WisdomTree Energy Transition Metals (WENT) and WisdomTree Battery Metals (WATT) due to their fit with the respective strategies. WENT and WATT are two synthetic ETPS that were launched in April 2022.
The firm writes that the products and indices that they track have always been to be adaptive to market conditions: to introduce materials important to the theme when a liquid futures market develops, and change weights according to the fundamental outlooks for these metals.
However, volumes traded remain low in comparison to other metals, the firm says, and so the indices’ methodologies constrain the weights assigned to these two materials. Currently the respective indices have target weights at rebalances for lithium and cobalt of 2.5 per cent and 0.5 per cent respectively.
As a result of the inclusion of the metals in the strategy for these investment products, the firm writes that it believes that this will lead to enhanced liquidity and price discovery in the wider market.