BlackRock (NYSE:BLK)'s iShares Essential Metals Producers UCITS ETF (Deutsche Börse Xetra and Euronext Amsterdam: METL), an investment vehicle providing exposure to mining companies extracting energy transition metals, was highlighted this Friday. The fund targets investors capitalizing on the shift from fossil fuels to sustainable energy alternatives. It is linked to the S&P Global Essential Metals Producers Index, which selects constituents from companies with market capitalizations above $300 million and average daily trading volumes greater than $3m.
The ETF includes firms dealing with key metals like copper, lithium, nickel, cobalt, platinum, palladium, and rare earth metals. These are in high demand due to the transition towards renewable energy technologies. Manuela Sperandeo underscored the rising demand for these minerals due to strategic priorities, supply chain issues, and low-carbon investment opportunities.
The index uses 'Exposure Scores' derived from firms' revenue generation from metal discovery, extraction, and processing of 'core' or 'non-core' metals like aluminum, bauxite, molybdenum, silver, zinc. The demand for these metals isn't significantly influenced by the sectoral transition. Companies with high revenue from non-core metals see a relative decrease in their Exposure Scores.
The index aims for a roster of at least 50 constituents meeting or exceeding a specific Exposure Score threshold. Constituents are weighted using a hybrid formula considering float-adjusted market capitalization and Exposure Scores. Capping rules limit individual stock weightings with high-scoring firms capped at 8% portfolio weighting and lower-scoring ones capped at 4%.
The fund accumulates income within its portfolio for long-term capital growth and has an expense ratio of 0.55%. This new ETF expands BlackRock's offerings following the iShares Copper Miners UCITS ETF (COPM).
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