WisdomTree: Lithium and cobalt added to products in its energy transition range

WisdomTree: Lithium and cobalt added to products in its energy transition range

April 25, 2023

Commodities

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 their fit with the respective strategies. WENT and WATT are two synthetic exchange-traded products launched in April 2022.

The products and indices that they track have always been designed by WisdomTree 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 (see Figure 1). Therefore, 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% and 0.5% respectively.

As a result of the inclusion of the metals in the strategy for these investment products, we believe that this will lead to enhanced liquidity and price discovery in the wider market.

Figure 1

Assets

Open Interest x Contract Value (US$)

Volume x Contract Value (US$)

Copper

                                    22,289,946,188

                           9,401,176,725

Silver

                                    14,660,517,960

                           7,475,798,880

Platinum

                                       2,850,681,160

                              767,246,380

Zinc

                                       9,316,235,819

                              226,832,900

Aluminium

                                    28,423,884,319

                              211,111,650

Nickel

                                    15,783,447,150

                              139,409,910

Lead

                                       3,437,280,713

                                 73,647,725

Cobalt

                                          661,617,485

                                 13,232,350

Tin

                                          770,816,250

                                   5,951,250

Lithium

                                            61,626,500

                                   2,161,250

Source: WisdomTree, Bloomberg, 31/03/2023. Aggregate volumes and open interest across the futures curve (i.e. not a single maturity). Historical performance is not an indication of future performance and any investments may go down in value.

Product overview

Before fees and expenses, WENT seeks to track the performance of the WisdomTree Energy Transition Metals Commodity Index TR, while WATT seeks to track the performance of the WisdomTree Battery Metals Commodity Index TR. WisdomTree has developed the index strategies with the holdings and weightings of the two baskets designed to capture the demand and growth of specific metals involved in energy transition technologies under the 1.5-degree scenario[1]. Wood Mackenzie, a leading energy transition research and consulting firm, provides WisdomTree with forecasts for the demand for energy transition and battery materials for the coming 3 years under the 1.5 degree scenario, which are used to determine the weights.

The WisdomTree Energy Transition Metals exchange-traded commodity (ETC) allows investors to access the key metals involved in the energy transition megatrend including electric vehicles, transmission, charging, energy storage, solar, wind, and hydrogen power production. The index was comprised of copper, nickel, aluminium, silver, zinc tin, platinum, and now also lithium and cobalt.

The WisdomTree Battery Metals ETC allows investors to access the key metals involved in the battery theme, a sub-set of the energy transition megatrend. The index was comprised of nickel, aluminium, copper, and zinc and now also lithium and cobalt.

The indices are reconstituted on an annual basis in January and with a quarterly review process to assess if additional commodity metals can be added or if target weights can be increased, depending on the inclusion criteria such as liquidity. 

New weights

With the addition of these new materials the new target weights are as follows:

WisdomTree Energy Transition Metals (WENT)

%

Nickel

24.25

Copper

20.79

Aluminium

17.32

Silver

13.86

Zinc

10.39

Tin

6.93

Platinum

3.46

Cobalt

2.50

Lithium

0.50

 

WisdomTree Battery Metals (WATT)

%

 Nickel 

38.84

 Aluminium

29.11

 Copper 

19.39

 Zinc

9.66

 Cobalt 

2.50

 Lithium 

0.50

Source: WisdomTree, Weights effective as of 17 April 2023.

  

Product information

Share Class Name

MER

Exchange

Trading Currency

Exchange Code

ISIN

WisdomTree Battery Metals

0.45%

LSE

USD

WATT

XS2425842106

WisdomTree Battery Metals

0.45%

LSE

GBx

AMPS

XS2425842106

WisdomTree Battery Metals

0.45%

Borsa Italiana

EUR

WATT

XS2425842106

WisdomTree Battery Metals

0.45%

Xetra

EUR

WATT

XS2425842106

WisdomTree Energy Transition Metals

0.45%

LSE

USD

WENT

XS2425848053

WisdomTree Energy Transition Metals

0.45%

LSE

GBx

NRGT

XS2425848053

WisdomTree Energy Transition Metals

0.45%

Borsa Italiana

EUR

WENT

XS2425848053

WisdomTree Energy Transition Metals

0.45%

Xetra

EUR

NRGT

XS2425848053

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