Invest in Lithium

Invest in Lithium

Lithium is one of several essential metals needed in the transition to a green and sustainable world. The electrification of our society is a strong driving force for its increased demand, which also makes the metal interesting from an investment perspective. This text will explain why lithium can be good to add to an investment portfolio and how to invest in lithium.

Why invest in Lithium?

Lithium belongs to the group of alkaline earth metals and is an essential component in, e.g. batteries. The metal’s properties give batteries high energy density and longer durability than its predecessors. Lithium-ion batteries are the most common lithium-based batteries used in, e.g. mobile phones, electric cars and computers. Demand for this type of battery is expected to increase in the coming years. A major reason for this is the conversion to an electrified vehicle fleet. Most major car manufacturers today have stated that they will phase out the production of traditional internal combustion engines and switch entirely to electric propulsion.

Investing in the commodities required to create a green future can be a good strategy for diversifying your portfolio. In addition, getting direct exposure to the commodity itself is beneficial if you do not know which companies will build the best products from the commodity. By owning the commodity directly, or the companies that extract the raw material, you can get a cleaner exposure to a future price increase in the commodity.

How to invest in lithium?

There are several ways to invest in lithium: ​

  • Stocks: Buying shares in the companies that create extracts the raw material.

  • Funds: Invest in a fund that provides direct exposure to the commodity or the companies that extract the commodity. There are different types of funds. When you invest in a fund, you pay a fee for an expert (fund manager) to select the underlying assets. There are two types of funds:

    • Daily traded fund: Often actively managed, which means that an expert reviews the holdings and rebalances at regular intervals.

    • Exchange-Traded Fund: A basket of securities that follows an index and is traded like a stock.

An example of a fund that provides exposure to companies that extract Lithium is AuAg Precious Green.