Down 14% in 2022, is the EFTS Battery Tech & Lithium EFT (ACDC) a buy?

Here are some of the arguments for and against the lithium and battery tech ETF.

| More on:
green lithium battery being held by person

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • After starting 2022 trading at $96.64, shares in the ETFS Battery Tech & Lithium ETF will currently set an investor back $83.30 apiece
  • That might be a good entry point on the fund flagged as a good buy for investors wanting to invest in electric vehicles, critical minerals, and commodities needed for decarbonisation without stock picking
  • However, this week's turbulence among lithium producing shares might have caused some potential investors to be wary of the ETF 

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 Sachsbearish 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

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

A woman holds up hands to compare two things with question marks above her hands.
ETFs

Why I prefer AFIC shares to an ASX 200 index fund today

Love ETFs? Here's an alternative that I think all investors should consider.

Read more »

A young man with short black fuzzy hair and wearing a black and white striped t-shirt looks surprised at a broker's tip that Macquarie shares will rise by 30%
ETFs

Expert names one of the best ETFs for ASX investors to buy now

Here's why this could be one of the best ETFs to buy right now...

Read more »

3 asx shares represented by investor holding up 3 fingers
ETFs

3 ETFs for ASX investors to buy right now

Here are three top ETFs to consider...

Read more »

A woman sits at her computer in deep contemplation with her hand to her chin and seriously considering information she is receiving from the screen of her laptop regarding the Xero share price
ETFs

Is the Vanguard MSCI International ETF (VGS) a good alternative to global tech shares?

Should investors think about the VGS ETF for its tech exposure?

Read more »

An accountant gleefully makes corrections and calculations on his abacus with a pile of papers next to him.
ETFs

Is the VAS ETF providing a bigger dividend yield than other ASX 200 index funds?

Does the VAS ETF come out on top when it comes to dividend income?

Read more »

ETF written in yellow with a yellow underline and the full word spelt out in white underneath.
ETFs

2 quality ETFs for ASX investors to buy next week

These ETFs are highly rated for a reason...

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
ETFs

3 things I love about the iShares S&P 500 ETF right now

Leading global tech exposure and low fees..what’s not to like about this ETF?

Read more »

a man sits in casual clothes in front of a computer amid graphic images of data superimposed on the image, as though he is engaged in IT or hacking activities.
ETFs

Here’s why I prefer NDQ to these other ASX tech ETFs today

Here's my pick when it comes to tech ETFs...

Read more »