For investors seeking momentum, Global X Lithium ETF LIT is probably on radar now. The fund just hit a 52-week high of $28.37. Shares of LIT are up roughly 37.5% from their 52-week low price of $20.64/share.
But could more gains be ahead for this ETF? Let’s take a quick look at the fund and the near-term outlook to get a better idea on where it might be headed:
LIT in Focus
The fund looks to track the performance of the largest and most liquid listed companies that are active in the exploration and/ or mining of Lithium or the production of Lithium batteries. The U.S. takes the top spot in the fund with about 37.7% exposure. The fund charges 76 bps in total fees (see all Materials ETFs here).
Why the Move?
The fate of the metal lithium is often associated with electric cars and in turn with the electric car maker Tesla Motors TSLA. This is because this material is used in making lithium-ion batteries that power electric cars.
China’s Tencent Holdings recently bought a 5% stake in U.S. electric carmaker Tesla. This acquisition would help Tesla to alleviate its cash issues and concentrate on launching its Model 3 cars. This explains why Lithium ETF is on the spotlight now.
Moreover, the global drive against the emission of greenhouse gas will eventually increase demand for electrically run cars compared with conventional diesel-driven cars.
More Gains Ahead?
The fund has a positive weighted alpha of 31.20. A positive weighted alpha hints at more gains. As a result, there is definitely still some promise for investors who want to ride on this surging ETF.
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April 03, 2017 at 05:23PM
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from Sanghamitra Saha
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