Batteries, Tech Focus Of ETF Filing

March 28, 2019

GraniteShares has filed for two ETFs that are a decided departure from the firm’s usual commodity focus. The GraniteShares Battery and Miners ETF (POWR) and the GraniteShares Junior Tech Mega Trends ETF (MEGA) will focus on specific slices of the equity market. Each fund is projected to have an expense ratio of 0.70% and list on the NYSE Arca.

Battery ETF

POWR will track an index that covers domestic and foreign battery producers and battery metal miners, with each group constituting half of the index. The index requires companies to meet minimum size, liquidity and free-float thresholds as well as qualify as either pure-play or quasi-play companies.

Pure-play companies are defined as those that derive at least 50% of their revenues from the fund’s targeted business activities, while quasi-play companies derive less than half but more than 25% of their revenue from such activities. The prospectus notes quasi-play companies are capped at weights of 2% within the index.

In all, there are 50 securities included in the index, with the components rebalanced to equal weights and reconstituted quarterly, the document says.

Global X already offers the $582 million Global X Lithium & Battery Tech ETF (LIT), which covers a very similar slice of the market for an expense ratio of 0.75%. And last year saw the launch of the Amplify Advanced Battery Metals and Materials ETF (BATT), which has $5.6 million in assets under management and comes with an expense ratio of 0.72%. 

‘New Tech’ ETF

MEGA takes a very different approach from POWR. It focuses on domestic and foreign companies with business activities in the areas of artificial intelligence, cybersecurity, financial technology, internet of things and robotics. Eligible companies must generate at least 50% of their revenue from one or more of those areas, the prospectus says.

Each business activity category is represented by 10 companies for a total of 50. Companies are selected based on size and liquidity. At rebalancings, the companies are equal-weighted within their category, and each category is reset to a weight of 20% of the index.    

There are a number of similar funds available to investors. For example, at the start of this month, Goldman Sachs launched the Goldman Sachs Motif Data-Driven World ETF (GDAT), which has a similar focus to MEGA and charges an expense ratio of 0.50%.

However, the largest comparable fund is likely the iShares Exponential Technologies ETF (XT), which debuted four years ago and has $2.4 billion in assets under management for a fee of 0.47%.

Contact Heather Bell at [email protected]

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