World’s first physically-backed EV metals ETC launched

Switzerland-based Global Palladium Fund announced the launching of its own physical electric vehicle metals exchange-traded commodities (ETC) with $10 million of seed capital, initially listing on the Borsa Italiana and with plans to list on the Deutsche Börse, London Stock Exchange and SIX in the coming weeks.

In a press release, the firm said the ETC is backed by physical metal and will track the performance of the Solactive GPF Electric Vehicle Index, which is made up of metals based on their use across four electric vehicle segments: battery (BEV), hybrid (HEV), plug-in hybrid (PHEV) and fuel cell (FCEV).

Solactive is a Germany-based index provider. Since 2007, it has been developing tailor-made and multi-asset class index solutions for ETFs and other index-linked investment products. Metals weights (capped at a maximum of 40%) in the index basket are copper (40%), palladium (28.13%), nickel (18.65%), cobalt (11.45%), and platinum (1.77%), with metals stored in LME warehouses in Rotterdam and LPPM vaults in London and Switzerland.

According to the Global Palladium Fund, the index will be rebalanced annually in July to reflect evolving use of metals across the different segments and includes the scope to introduce additional metals subject to use and availability.

“The growth in consumer appetite for electric vehicles in recent years has been phenomenal, and we are just at the start of this megatrend to replace the internal combustion engine,” Alexander Stoyanov, the Fund’s CEO, said in the brief. “When approaching this theme, it can be hard for investors to know which equities to select, particularly when valuations are stretched and it is unclear which technologies or companies will be the winners. GPF is providing investors with an innovative physically-backed solution that offers a unique and diversified risk and return profile compared to traditional equity-based investments.”

In the view of Stoyanov and his team, at a time when investors are looking for diversification, the GPF physical electric vehicle metals ETC provides transparent access to key metals used in EVs. In parallel, exposure to the metals is expected to help investors hedge price risk as competition for access to key raw materials gathers pace.