WisdomTree has launched the ninth ETF in its energy transition range, listing RARE on the Italian and German stock exchanges and which was due to list in London today (10th).
The WisdomTree Energy Transition Metals and Rare Earths Miners Ucits ETF (RARE) seeks to track the price and yield performance, before fees and expenses, of a WisdomTree index that reflects the same theme.
With a total expense ratio of 0.50%, the ETF tracks the performance of listed companies from developed and emerging markets, primarily involved in the energy transition metals value chain including the exploration and processing of rare earths elements.
The companies meet WisdomTree’s ESG criteria and the firm has partnered with Wood Mackenzie, an energy transition research and consulting firm, on stock seletion.
According to Wood Mackenzie, a 1.5 degree scenario global warming scenario would see electrification and renewables underpin the reduction in CO2 emissions and require around $60 trillion of capital expenditure by 2050. The energy transition will be metal intensive and a “positive for the crucial metals and miners involved in the energy transition value chain”.
RARE’s index tracks companies involved in the exploration and processing of metals used in technologies associated with energy transition themes, such as electric vehicles, transmission, charging, energy storage, solar, wind, and hydrogen. Crucial metals include lithium, nickel, cobalt, copper, iridium, aluminium, zinc, tin, silver, platinum and rare earth elements.
Chris Gannatti, global head of research at WisdomTree, said: “The transition to more renewable and sustainable energy sources could be the largest driver of metal demand over the coming decades.
“Metals like copper, nickel, aluminium, cobalt and lithium will need to see increased levels of extraction so that the technologies required to reach the climate targets set out in the Paris Agreement can be built. Wind turbines, for example, have traditionally relied on gearboxes, but direct drive turbines are becoming more popular offshore which is likely to reduce copper intensity but increase rare earth demand.”
He added that solar photovoltaic manufacturers are likely to increase their silver usage in order to gain efficiencies.
