While some miners operate more responsibly than others and investors may fear investing directly in a company that does not manage its environmental impact well, the commodity itself is neither good nor bad, a said Mr. Bloom. Therefore, the fund offers investors a way to gain direct exposure to the essential building blocks of electric vehicles without necessarily having to invest in a company with an ESG score “which may or may not succeed”, he said.
As for lithium, many people have asked why it’s not in the wallet, Bloom said. Although the ETF isn’t currently investing in lithium, “it’s on the menu,” he said.
“It’s just that lithium futures don’t meet minimum liquidity thresholds, and every six months we revalue,” Bloom said. “So something like lithium can come into the portfolio once it hits those liquidity thresholds from an investment and risk management perspective.”
Invesco’s impetus to bring the EV fund arose both from requests from institutional investors and from its own research, he said. Around the same time last year that institutional investors were making those demands, Invesco’s research indicated that demand for those EV-related products was likely to increase, Bloom said.
“…We were coming to the realization, based on demand and supply forecasts, that the energy transition was likely to trigger accelerated demand growth for these critical minerals,” he said. declared. “And when you looked back two or three years – that was a year ago – those demand curves started to move away from the projected supply curves.”
Mr Bloom cited an executive order signed by President Joe Biden on August 5, 2021, which set a target for half of all new passenger cars and light trucks sold in 2030 to be electric vehicles.
“We don’t have the current capacity within the mining industry to meet that demand,” he said, adding that while President Biden wants electric vehicle production to increase dramatically in eight years, but that it takes 10 years to license a new mine, it is likely that higher prices will be needed not only to stimulate capital investment from the mining industry, but also to attract the attention of regulators, “who must propose a viable authorization process”.
“The risk-reward looked really good to us,” he said.
Atlanta-based Invesco had about $1.6 trillion in assets under management worldwide as of March 31.