Top 5 lithium ETFs in Australia to watch in 2024

As the world's largest lithium producer, Australia plays a key role in the global battery value chain. As global demand for lithium-based energy grows, particularly driven by the rapid expansion of the electric vehicle (EV) market, Australia has the opportunity to capitalise on its strong output and abundant lithium reserves to shape the industry landscape in the 2030s.

While lithium prices were subdued by oversupply in the first half of 2024, experts continue to predict a bright long-term outlook for this key battery material as countries around the world pursue net-zero targets. Australian lithium mining companies have a significant presence in the global lithium supply, particularly in Western Australia, which is home to a number of significant lithium projects.

This guide explores the top lithium ETFs on the ASX, provides insights into the impact of global market policies on lithium, and how to invest in these top lithium ETFs in Australia.

What are lithium ETFs?

Lithium ETFs are investment funds that trade on stock exchanges and concentrate on the lithium sector, encompassing businesses that are involved in the search for, extraction, and manufacturing of lithium products. By investing in lithium ETF, investors gain access to a diversified portfolio of lithium-related stocks, eliminating the need to directly purchase and manage individual lithium stocks.

This convenient and risk-diversified approach simplifies investing in the lithium market, which can be inherently complex due to the volatility of the market and a variety of factors affecting lithium prices and company performance. Also, as global demand for clean energy and electric vehicles grows, these ETFs may benefit from broader market trends.

Why invest in lithium ETFs in Australia?

Reasons to invest in ASX Lithium ETFs include the following:

1. Global energy transition trend: With the further push of the global energy transition trend and the volume growth of electric vehicles, lithium, as the core element of battery materials, is peaking. Investing in ASX Lithium ETFs or shares allows investors to participate in this global energy transformation and get a share in the dividends from the growth of the electric vehicle industry.

2. Market growth potential: While lithium prices may fluctuate, in the long term, demand for lithium is expected to continue to grow with the development of electric vehicles and energy storage technologies, providing investors with medium to long term growth potential. Global lithium demand is expected to exceed 2.4 million tons of lithium carbonate equivalent in 2030, double the 2025 demand forecast, according to research firm Statista. This demonstrates a strong demand for lithium and provides a solid market base for ASX lithium ETFs or stock investments.

3. Chain integration advantages: Large miners dominating the lithium business have a market advantage, and large automakers prefer to enter into lithium supply agreements with large, financially sound companies. Investing in ASX lithium ETFs or shares allows investors to benefit from industry chain integration, especially in the context of the global lithium resource supply and demand contradiction. The bargaining power and market control of large miners will be more prominent.

4. Lithium resources and infrastructure: Many ASX lithium mining companies are located in Australia's richest lithium resources, and have convenient infrastructure, which provides advantages for reducing production costs and improving efficiency. For example, many lithium projects are located close to the port of Darwin, with well-developed roads and adequate power supply, which will reduce the cost of commercial production and thus return value to shareholders.

5. High market interest: Some of the companies in the ASX lithium sector remain hot spots for market interest and pursuit, particularly those with good exploration prospects and projects. With global electric vehicle purchases on the rise, market interest in lithium mining companies continues to increase, which provides a high level of market interest and liquidity for investment in ASX lithium ETFs or shares.

Top 5 lithium ETFs to watch

Here are the lithium ETFs ranked by market capitalisation:

Global X Battery Tech & Lithium ETF (ASX: ACDC)

Global X Battery Tech is the only lithium-specific ETF on the ASX that invests in companies across the lithium cycle, including mining, refining and battery production. It provides investors with exposure to global companies developing electrochemical energy storage technology and mining companies producing battery-grade lithium.

For ASX investors, there are also options for lithium ETFs listed on offshore stock exchanges such as the NYSE and NASDAQ.

Amplify Lithium & Battery Technology ETF (NYSEMKT: BATT)

The Amplify Lithium & Battery Technology ETF investment objective is to track the performance of the EQM Lithium & Battery Technology Index. The ETF invests primarily in companies worldwide related to the development and production of lithium battery technology and battery storage solutions, as well as the exploration, processing or recycling of materials and metals used in lithium-ion battery chemistry, and the development and production of electric vehicles.

iShares Global Clean Energy ETF (NASDAQ: ICLN)

The iShares Global Clean Energy ETF seeks to track the performance of the S&P Global Clean Energy Index and invests in clean energy companies worldwide, including companies in the solar, wind and other renewable energy sectors. ICLN's positions cover mid-cap stocks in the energy, industrials, technology and utilities sectors.

First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ: QCLN)

First Trust NASDAQ Clean Edge Green Energy Index Fund is an exchange-traded fund that tracks the NASDAQ Clean Edge Green Energy Index and invests primarily in U.S.-based companies involved in the manufacturing, development, distribution and installation of clean energy technologies. Listed companies. The fund covers sectors such as solar photovoltaics, advanced batteries, fuel cells and electric vehicles.

ARK Autonomous Technology & Robotics ETF (NYSEMKT: ARKQ)

The ARK Autonomous Technology & Robotics ETF is an exchange-traded fund managed by ARK Invest that invests in companies in automation, robotics, 3D printing, energy storage, space exploration, etc. ARKQ is not purely a lithium and battery ETF, but its portfolio includes companies that have a significant presence in the electric vehicle space, such as Tesla.

How to invest in lithium ETFs in Australia?

Australian investors who want to invest in lithium ETFs can follow these steps:

1. Open an account: First, you need to register an account on the moomoo platform. You can access the registration page on the moomoo and follow the prompts to complete the registration process.

2. Deposit: Once your account has been successfully opened, you will need to deposit funds into your moomoo account. This can usually be done via bank transfer or credit card to ensure you have enough funds in your account to purchase the Australia Lithium ETFs you wish to invest in.

3. Select your lithium ETF: Through the moomoo platform's search function, enter lithium-related codes or keywords to find the Australia lithium ETFs you are interested in, and click to enter the specific trading page.

4. Place a trade order: After selecting a specific Australia lithium ETF, you can place a trade. Moomoo supports a variety of order types, including limit orders, market orders and stop-loss orders. You can choose the most suitable order type according to your trading strategy and market conditions. For details on transaction fees, please refer to the moomoo pricing page.

Final thoughts on lithium ETFs

As the global energy transition trend further strengthens and electric vehicles and renewable energy develop rapidly, the demand for lithium batteries continues to grow, thereby driving the demand for lithium mines. Despite a 21% drop in lithium prices this year, global supply is expected to surge by nearly 50%.

Another aspect, due to the large-scale economic stimulus measures recently taken by the Chinese government and central bank, the price of lithium carbonate has rebounded somewhat, but the market still has concerns about oversupply and demand fluctuations. Countries such as Chile and Argentina have indicated plans to increase lithium production in the future, while China is also actively expanding lithium projects in Africa.

With the world moving towards cleaner energy and an increasing reliance on lithium, now is a good time to explore the potential of ASX lithium ETFs and consider adding them to your portfolio. It should be noted that when considering investing in lithium ETFs, Australian investors need to pay close attention to changes in global supply and demand, price trends, industry policies, and pay attention to investment risks.