Hedge Fund Drives Lithium ETF Creation

Jul 28 2010 | 12:11pm ET

Investors seeking an easy and liquid way to invest in lithium—without having to worry about storing the highly-reactive and flammable metal—can now do so on the NYSE Arca exchange, thanks to a hedge fund.

Exchange-traded fund firm Global X Management last week launched Global X Lithium. It did so at the urging of hedge fund MC Capital Advisors, which has seeded the ETF, and in exchange will share in half of its profits.

MC Capital pushed Global X to launch the fund after being urged itself by a client, Bolivian hand-held device mogul R. Marcelo Claure. Bolivia has one of the world’s largest deposits of lithium, which is not traded on any commodity exchange.

Claure told The Wall Street Journal that lithium is the “commodity of the future.” Lithium is an important component in batteries and is used to treat bipolar disorder and depression. Lithium batteries are expected to become increasingly important in the movement towards electric cars.

The ETF does not itself invest in physical lithium, nor in lithium derivatives, as there are none of the latter. Instead, it seeks to replicate the Solactive Global Lithium Index through stocks of companies engaged in lithium mining, exploration, investment and lithium-ion battery production.

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