KraneShares launched its newest fund, the KraneShares Electrification Metals ETF (KMET), which will offer targeted exposure to the metals that will be necessary for the electrification and clean energy transition of the world’s economy in the pivot to net-zero emissions.
The fund seeks to track the Bloomberg Electrification Metals Index and is comprised of futures contracts on copper, nickel, zinc, aluminum, cobalt, and lithium. These metals are all core components for batteries, electric vehicles, and the renewable energy infrastructure that is being created and expanded as countries aim for net-zero emissions by 2050 to curtail global warming.
“Transitional commodities are expected to experience a supply and demand imbalance over the next decade,” said Luke Oliver, head of strategy at KraneShares, in the press release. "These resources may be repriced depending on how they factor into the decarbonization of the global economy. We believe now is the time to invest in these electrification metals as demand is poised to accelerate into the energy transition.”
Demand is expected to grow over time, driving up the value of these metals as electrification sweeps across industries. According to the International Energy Agency, mineral demand is anticipated to triple by 2040 as low-carbon and low-emissions power generation increases. Demand for batteries alone could increase five-fold just between 2020–2025, which will require lithium, zinc, nickel, and cobalt as electric vehicles gain in popularity and take increasing market share from internal combustion engine vehicles.
Capturing Growing Demand for Metals
Over $140 trillion will be needed in investments over the next three decades for the clean energy transition. KMET will be strongly positioned to capture the growing demand and value of the metals needed for electrification.
Aluminum is currently used in transmission and distribution grids, is a core part of solar panels and wind turbines, and is expected to have increasing use in EV batteries over time due to its durability and light weight. Copper is one of the fundamental metals used for electric wiring and cabling, is a vital part of existing renewable energy technologies, and is heavily used in EVs; electric vehicles require double the amount of copper that traditional ICE vehicles do.
“KMET is a timely expansion of the KraneShares Climate Investment suite, which has quickly evolved from our flagship KraneShares Global Carbon Strategy ETF (KRBN ) to include regional carbon markets, energy transition equities, and now electrification metals,” said Jonathan Krane, CEO at KraneShares. “We believe investors should have direct access to the global decarbonization investment opportunity.”
KMET has an expense ratio of 0.79% and joins the climate-focused lineup of funds from KraneShares that includes KRBN, the KraneShares California Carbon Allowance Strategy ETF (KCCA ), the KraneShares European Carbon Allowance Strategy ETF (KEUA ), the KraneShares Global Carbon Offset Strategy ETF (KSET ), which is focused within the voluntary markets, as well as the KraneShares Global Carbon Transformation ETF (KGHG ), which seeks to capture high-intensity carbon-emitting companies transitioning to renewables.
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