Invesco launches ETF focused on metals required for electric vehicles, energy transition

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Amid a boom in interest for electric vehicles, Invesco is betting that the metals required for EVs and the energy transition broadly will be a hot new area for investors.

The Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF, which focuses exclusively on the metals required for EVs, began trading Wednesday. The fund trades under the ticker EVMT, and it holds futures contracts tied to aluminum, copper, nickel, cobalt, zinc and iron ore. The portfolio will generally be concentrated in the front-month contract for each commodity.

Lithium, which is the key metal across EV batteries, is notably missing.

Jason Bloom, head of fixed income and alternatives ETF product strategy at Invesco, said lithium futures trading does not currently meet the firm's minimum liquidity threshold for ETFs.

Metals prices have surged this year after Russia's invasion of Ukraine prompted shortage fears, but Bloom believes more gains are ahead.

«Growth in demand for metals is part of the growth in EVs, and was beginning to catch up and in some cases outstrip supply,» prior to Russia's invasion, he said. «The war in Ukraine simply highlighted the upside risk in these commodities.»

«We feel like there's a fair amount of durability to the current fundamentals in the market,» he added.

The Wall Street Journal first reported the fund's launch.

New mines take years to bring online, and can face permitting hurdles. Additionally, the resource-intensive nature of mining means new projects often face opposition based on concerns around impacts to local communities. Forecasts call for more materials that will be needed to move the world away from fossil fuel dependence, which has prompted some to forecast prolonged shortages.

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