USCF today announced it has launched the , which seeks total return by investing primarily in metals derivative instruments and, to a lesser extent, the equity securities of companies that are economically tied to the metals that are necessary for the process known as “electrification.”
“The energy transition is here, and we believe that demand for certain metals should increase as the global economy undergoes a process known as electrification,” said John Love, president and CEO of USCF, in a news release. “During electrification, energy derived from sustainable sources such as wind, solar, and hydroelectric power will gradually replace energy generated by fossil fuels.”
Love added: “The infrastructure needed to produce and store that energy, such as in Electric Vehicle batteries, will require substantial amounts of certain metals. As a result, electrification may lead to rising prices for these metals over time.”
The metals selected for inclusion in ZSB are selected through a proprietary multi-factor quantitative methodology. The fund’s holdings will consist of instruments tied to industrial metals, precious metals, and rare earth metals that are used in batteries, battery charging infrastructure, and sustainable energy generation and storage infrastructure.
ZSB’s metals investments will initially include metals such as cobalt, copper, iron ore, lithium, nickel, and other metals currently used in battery and electrification infrastructure. Specific metals may be added or removed as eligible metals when changes occur in the evolution of battery and electrification metals technology, and when exposure to these metals can be obtained.
The metals derivatives in which the fund will invest are futures and swaps and, to a lesser extent, options and forwards. The metals equities in which the fund will invest are the common stock of companies located in both the U.S. and in foreign countries, including in emerging markets, which are economically tied to the metals because they derive a substantial portion of their revenue from the mining, processing, production, refining, recycling, and other related activities of such metals.
The actively managed exchange traded fund seeks to achieve a “net-zero” carbon footprint by purchasing carbon offset investments in an amount equal to the estimated aggregate carbon emissions of the fund’s holdings.
ZSB carries an expense ratio of 0.59%.