The ETFS Battery Tech & Lithium ETF (ASX: ACDC) share price has been struggling this year, but has its downfall presented a buying opportunity?
Experts flagged the exchange-traded fund (ETF) as worth looking at earlier this year. Let's take a look at what the ETF has going for it – and against it – right now.
At the time of writing, shares in the ETFS Battery Tech & Lithium ETF will set an investor back $83.30 apiece.
What's to like about ETFS Battery Tech & Lithium ETF?
The ETFS Battery Tech & Lithium ETF (ASX: ACDC) could be a good entry point for ASX investors interested in getting on board the lithium train without all the hassle.
That's according to Saxo Markets strategists Jessica Amir, Redmond Wong, and Charu Chanana. They believe the ETF could help investors get an easy foothold in the decarbonisation movement.
"[I]f stock picking is not for you, and if you believe, like we do, that the electric vehicle industry and the critical minerals [and] commodities will continue to see rising demand, and policy support, and also benefit from the world striving to be carbon neutral by 2050, then you could invest or trade in … ETFS Battery Tech & Lithium ETF," the strategists wrote in March.
However, this week's ASX lithium sell-off might have some potential investors wary of the ETF.
As The Motley Fool Australia's James Mickleboro reported this morning, ASX lithium shares' Wednesday tumble – generally attributed to Goldman Sachs' bearish outlook – might have had a more permanent catalyst.
Instead, Chinese electric vehicle manufacturer, BYD, might have been behind much of yesterday's sell-off.
The company is reportedly snapping up mines to provide all its lithium needs for the next 10 years. That would, presumably, see demand for the 'white gold' fall, potentially taking its value with it.
Though, it's worth noting that the ETFS Battery Tech & Lithium ETF's biggest holding is in BYD. It currently makes up 4.6% of the fund's investments.
Therefore, it could be assumed that the bad news for lithium-producing stocks could be, in some way, good for the ETF.
Additionally, only 22.6% of its holdings are in the materials sector. Thus, lithium producers are a minority of its investments.
Therefore, some ASX investors might still agree with Saxo Markets' view of the ETFS Battery Tech & Lithium ETF despite this week's lithium sell-off
