USCF Investments, which manages $4 billion in assets, launched a sustainable commodity futures exchange-traded fund on Wednesday, tapping into growing demand in the electric vehicle and energy storage markets.
The actively managed USCF Sustainable Battery Metals Strategy Fund (ZSB) aims to invest in metals futures and in the equity securities of companies that are economically tied to metals the firm believes are necessary for “Electrification”—an energy transition process that involves energy generated by fossil fuels being replaced by energy produced from sustainable sources such as wind, solar and hydroelectric power, according to the fund’s prospectus.
“The fund is offering direct upstream exposure to the metals and minerals that are critical for the energy transition,” USCF’s Chief Investment Officer Kevin Baum told ETF.com. “These include metals and minerals used in batteries for electric vehicles, solar panels and wind turbines etc.”
ZSB is the latest fund to join a growing lineup of commodity ETFs focused on EV battery production—all of which were launched in 2022, according to ETF.com data—with the Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF (EVMT) paving the way as the first ETF in the sector, last April.
This rapid development in EV battery-focused ETFs has been propelled by the surge in demand for electric vehicles over their gas-powered counterparts. Data from the Department of Energy found that EVs are more energy efficient, environmentally friendly and come with a track record of high performance, in comparison to gasoline-run vehicles.
The new ETF stands out from other competing funds in the battery and electric vehicle manufacturing space as it incorporates a sustainability criterion that evaluates carbon emissions related to the production of these metals, Baum added.
According to the fund’s prospectus, ZSB aims to achieve a “net-zero” carbon footprint by “purchasing carbon offset investments in an amount equal to the estimated aggregate carbon emissions of the fund’s holdings.”
“In addition to considering the emissions profile of the metals themselves, we're also using ESG ratings to rank the equities of the companies that we own,” Baum noted.
ZSB is listed on the NYSE Arca and comes with an expense ratio of 0.59%. The fund currently has $2.5 million in assets under management, according to USCF’s website.
Contact Zoya Mirza at [email protected]