Alternative Investments/ESG: BlackRock Unveils Energy Transition Metals ETF

The BlackRock fund will ride the enduring trend of a worldwide transition from fossil fuels to more environmentally sustainable energy alternatives.

BlackRock (NYSE: BLK) has introduced a new thematic Exchange-Traded Fund (ETF) in Europe, with a specific focus on companies engaged in mining and processing metals vital for energy transition technologies. The iShares Essential Metals Producers UCITS ETF is now available for trading on Deutsche Börse Xetra in euros (CEBT GY) and Euronext Amsterdam in US dollars (METL NA). This fund is designed for investors looking to benefit from the global shift away from fossil fuels towards more sustainable energy alternatives.

One notable feature of this ETF is that it accumulates income within the portfolio, making it an attractive option for those seeking long-term capital growth. Its expense ratio is set at 0.55%. (ETF Strategy)

The new BlackRock ETF is linked to the S&P Global Essential Metals Producers Index, which selects its components from a pool of companies in developed and emerging markets with market capitalizations exceeding $300 million and substantial daily trading volumes exceeding $3 million.

Companies within this universe are assessed based on ‘Exposure Scores,’ determined by the percentage of revenue generated from core or non-core metals. Core metals, such as cobalt, copper, lithium, nickel, platinum, palladium, and rare earth metals, are expected to see strong demand due to the transition to renewable energy technologies. On the other hand, non-core metals like aluminum, bauxite, molybdenum, silver, and zinc are used in renewable energy but won’t experience significant demand shifts due to this transition.

Companies heavily reliant on non-core metals will have lower Exposure Scores compared to those primarily involved in core metals. The index aims to include companies surpassing a specific Exposure Score threshold and targets at least 50 constituents. These constituents are weighted based on a formula considering their market capitalization and Exposure Scores, with capping rules to limit individual stock weightings.

As of October 18, the index’s primary country exposures were Australia (20.9%), Canada (17.3%), the US (15.4%), the UK (8.9%), China (8.6%), and South Africa (6.0%).

Related Story:  BlackRock Amongst Investors Funding NorthVolt With $1.2B

Image credit: Lithium miner Pilbara Minerals

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