WisdomTree has expanded its range of ETFs providing targeted exposure to the metals driving the energy transition with the launch of the WisdomTree Strategic Metals UCITS ETF (WENU).
WENU, seeks to track the price and yield performance, before fees and expenses, of the WisdomTree Energy Transition Metals Commodity UCITS Index and has a total expense ratio (TER) of 0.55 per cent. WENU, is listed on Börse Xetra and Borsa Italiana, alongside a Euro-currency hedged share class.
The ETF will list on the London Stock Exchange on 15 January 2025 alongside a GBP-currency hedged share class.
The firm writes that, leveraging its partnership with Wood Mackenzie, an energy transition research and consulting firm, WisdomTree has developed a proprietary strategy designed to capture the demand and growth of specific metals involved in energy transition technologies.
The strategy expands WisdomTree’s partnership with Wood Mackenzie and is the sixth ETP WisdomTree has launched leveraging Wood Mackenzie’s industry expertise, the firm says. It also complements the recently launched WisdomTree Energy Transition Metals and Rare Earths Miners UCITS ETF (RARE), so investors now have the choice to access this theme through equities or commodities with WisdomTree ETFs.
The WisdomTree Strategic Metals UCITS ETF is classified as an article 8 SFDR fund and allows investors to access key commodities associated with energy transition themes such as electric vehicles, transmission, charging, energy storage, solar, wind and hydrogen production. The selection and weighting of the underlying metals is based on a forward-looking Intensity Rating driven by Wood Mackenzie, which combines an Energy Transition Demand Rating (reflecting the demand growth forecast for the metal in the energy transition over three years) with a Market Balance Rating (reflecting whether the metal is under or over supplied).
The portfolio is currently comprised of copper, nickel, aluminium, silver, zinc, tin, lead, platinum, lithium and cobalt. It rebalances twice a year with a regular review process to assess if additional commodity metals can be added depending on the inclusion criteria, such as relevance in energy transition themes and liquidity.
Nitesh Shah, Head of Commodities & Macroeconomic Research, Europe, WisdomTree, says: “Metals will be crucial to advance the energy transition. Whether it is to power more electric vehicles or create solar panels, it’s hard to see a world where the development of energy transition technologies is not dependent on the supply of some key metals. However, the challenge is to ensure that the technologies needed to achieve the energy transition are produced at scale. The challenge for investors is to navigate through the dynamics of technology shifts, trade policies and sudden increases in metal supply. The expertise offered by our partnership with Wood Mackenzie and a methodology that incorporates both supply and demand drivers help the strategy remain highly adaptive to the evolving market.”
The energy transition will significantly impact commodity demand, the firm writes. “The likelihood of persistent demand for future metals to change energy systems bodes well for market prices. To align with global net-zero objectives, investments in energy transition and grid infrastructure need to triple from their 2020 levels. Energy transition and grid investment need to average USD4.55 trillion between 2023 and 2030, triple the amount spent in 2022.”
Alexis Marinof, Head of Europe, WisdomTree, adds: “We have been expanding our range of ETFs and ETPs that provide thoughtful access to the energy transition in collaboration with Wood Mackenzie. Whether investors are looking for equity or commodity exposure to the energy transition theme, our complementary strategies offers a differentiated solution to what exists elsewhere. With demand for crucial metals expected to outweigh supply significantly, investors could see a favourable environment for these metals as more attention is provided to the energy transition and climate change mitigation.”
