Invesco Launches EV Commodity ETF

April 27, 2022

Invesco’s latest ETF aims to generate returns from the combined demand for fully electric vehicles and the ongoing supply squeezes for critical materials. 

The Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF (EVMT) debuted on the Nasdaq on Wednesday, charging an expense ratio of 0.59% on debut. A fee waiver of 3 basis points expires at the end of August 2023. 

EVMT targets exposure to iron, copper, aluminum, nickel and cobalt through a combination of directly holding futures contracts in a Cayman Islands subsidiary, and through holding commodity-linked exchange-traded products.  

It uses the same structure as the Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (PDBC) to avoid being labeled as a commodity pool and incurring a different set of tax implications. 

The fund managers aim to position for minimal contango, differentiating the fund from index-based industrial metals funds like the Invesco DB Base Metals Fund (DBB) or the abrdn Bloomberg Industrial Metals Strategy K-1 Free ETF (BCIM)

 

 

Aluminum and copper prices are retreating from recent 20-year highs after Russia’s invasion of Ukraine, while nickel prices have leveled off after spiking in the first days of the war. Cobalt prices reached their 20-year highs in 2018 but have steadily increased through the second half of 2021 to reach prices near the element’s level in June 2018.  

Iron futures are the only commodity in EVMT’s basket that has posted a loss over the past 20 years. 

Jason Bloom, Invesco's head of fixed income and alternative product strategy, believes the disruption of Russia's invasion only adds to the upside risk for the commodities the fund tracks.

"We feel like there’s a fair amount of durability to the current fundamentals in the market," he said.

Contact Dan Mika at [email protected], and follow him on Twitter 

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