The Top 5 Cobalt ETFs: How To Invest in Green Metals
As more countries and companies make zero-carbon pledges, metals deemed essential for the clean energy transition are seeing demand explode. Learn how you can invest in green metals like cobalt through an ETF.
SustainFi Updated May 30th, 2022
Some of our posts may contain links from our affiliate partners. However, this does not influence our opinions or ratings. Please read our Terms and Conditions for more information.
Why invest in cobalt?
Electric vehicles (EVs) produce no carbon emissions, and the electrification of transport – currently responsible for around 14% of greenhouse gas emissions – is critical to addressing climate change.
Along with lithium and nickel, cobalt – a blue-gray metal found in nickel or copper deposits – is needed to make electric car batteries. EV batteries account for one-third of the cost of an EV, and metals are somewhere between 25% and 40% of the cost of the battery. Used in most lithium batteries, cobalt prevents them from overheating and makes them safer. Besides powering electric vehicles, lithium-ion batteries also have a use in energy storage.
With the surging EV demand as the backdrop, cobalt prices doubled in 2021, from $31,000 to over $70,000 per ton. As demand for EVs continues to grow, demand for cobalt should stay strong, even if cobalt content per battery drops.
Although cobalt supply should increase in 2022 as supply chain bottlenecks are resolved, the research firm Benchmark Mineral Intelligence forecasts a cobalt shortage by 2025, which would help cobalt prices.
What funds invest in cobalt?
There are several funds that invest in cobalt stocks:
- VanEck Green Metals ETF (GMET)
- VanEck Rare Earth/Strategic Metals ETF (REMX)
- Global X Disruptive Materials ETF (DMAT)
- Amplify Lithium & Battery Technology ETF (BATT)
- iShares MSCI Global Metals & Mining Producers ETF (PICK)
The best cobalt ETFs
No ETF invests only in cobalt. If you want to invest exclusively in cobalt, you should look into futures or stocks. Check out this list of the top cobalt stocks here.
|Fund / Ticker||Expense Ratio||Assets ($m)||2022 YTD Performance||Holdings||Cobalt producers (% of fund)|
|VanEck Green Metals ETF (GMET)||0.59%||25||-5%||51||19%|
|VanEck Rare Earth/Strategic Metals ETF (REMX)||0.53%||896||-10%||21||8%|
|Amplify Lithium & Battery Technology ETF (BATT)||0.59%||188||-18%||92||8%|
|Global X Disruptive Materials ETF (DMAT)||0.59%||5||-||51||7%|
|iShares MSCI Global Metals & Mining Producers ETF (PICK)||0.39%||1,600||6%||218||5%|
|SPDR S&P Metals & Mining ETF (XME)||0.35%||2,730||22%||33||0%|
However, if you are OK investing in cobalt alongside other green metals, you have a few options. We have also reviewed the traditional metal and mining ETFs but found them lacking.
VanEck Green Metals ETF (GMET)
- Expense ratio: 0.59%
- Cobalt stocks (% of assets): 19%
Launched in November 2021, the VanEck Green Metals ETF tracks the MVIS Global CleanTech Metals Index, which invests in companies that produce, refine, process and recycle green metals. Green metals are metals that enable the transition from fossil fuels to clean energy. They are cobalt, copper, lithium, rare earths, and zinc.
Although GMET is new and has about $25 million in assets, we think it’s the best option if you are looking for a cobalt ETF. The fund’s 50 holdings include cobalt stocks like Glencore (the world’s number one cobalt producer), China Molybdenum Co Ltd, Nanjing Hanrui Cobalt Co Ltd, and Jinchuan Group International Resources. In fact, the top holding, Glencore, happens to be the world’s largest cobalt producer. All-in, around 19% of the fund is invested in large cobalt suppliers. (With the caveat that cobalt doesn’t really move the needle for the mining giant Glencore, even though it’s the world’s top cobalt producer.)
About two-thirds of the world’s cobalt is processed in China, and GMET invests in Chinese stocks listed in mainland China. This is a plus because China A shares may be hard for individual U.S. investors to access otherwise. Chinese stocks are about a third of the fund’s assets, followed by U.S. and Canadian holdings.
The ETF costs 0.59%, which is reasonable.
VanEck Rare Earth/Strategic Metals ETF (REMX)
- Expense ratio: 0.53%
- Cobalt stocks (% of assets): 8%
Another ETF from VanEck, REMX was launched in 2010 to focus on rare earth and strategic minerals like tungsten. Rare earth minerals are the key inputs to some of the world’s most advanced technologies. To be included in the fund, companies must derive at least 50% of revenues from the rare earth/strategic metals industry.
Although the fund delivered great returns in 2021, the rare earth sector is volatile, with rapidly changing supply and demand. On top of that, REMX has only 20 investments, and the top ten are nearly two-thirds of the fund. The ETF is most exposed to Australia (over 40% of the assets), China (one-third of assets), and the U.S.
REMX’s top three holding, Zhejiang Huayou Cobalt Co Ltd, is roughly 8% of the assets, but it is the ETF’s only cobalt investment. So GMET may be a better way of getting into cobalt.
Amplify Advanced Battery Metals & Materials ETF (BATT)
- Expense ratio: 0.59%
- Cobalt stocks (% of assets): 8%
Launched in 2018, BATT invests in companies that make money from lithium battery technologies, including battery storage, battery metals, and electric vehicles. This is a thematic battery ETF, not a metals and mining ETF. Around one-third of the fund is invested in metals and mining; the rest is in electric cars and components, electric equipment, chemicals, semiconductors, and other stocks. BATT has a reasonable 0.59% expense ratio.
The ETF has around 90 holdings, and each investment is capped at 7%. The top three stocks are EV battery manufacturer CATL, Tesla, and the mining giant BHP Group. The world’s largest cobalt miner, Glencore, is in the top five. Other cobalt holdings include Chinese cobalt producers Zhejiang Huayou Cobalt Co, China Molybdenum, and Jinchuan Group International Resources Co. Added together, cobalt stocks are about 8% of the ETF’s assets.
BATT is a thematic way of investing in lithium-ion batteries, though not directly in cobalt.
Global X Disruptive Materials ETF (DMAT)
- Expense ratio: 0.59%
- Cobalt stocks (% of assets): 6.6%
Just launched in 2022, the Global X Disruptive Materials ETF (DMAT) invests in U.S. and foreign stocks of companies deriving at least half of their revenues from mining or refining carbon fiber, cobalt, copper, graphite, lithium, manganese, nickel, platinum and palladium, rare earth elements and zinc. To be included, stocks must have at least $100 million in market cap.
The fund owns Zhejiang Huayou Cobalt and Nanjing Hanrui, major Chinese cobalt producers. It’s not a cobalt ETF, but not the worst way of investing in battery metals.
iShares MSCI Global Metals & Mining Producers ETF (PICK)
- Expense ratio: 0.39%
- Cobalt stocks (% of assets): 5%
Launched in 2012, the iShares MSCI Global Metals & Mining Producers ETF (PICK) is a popular metals and mining ETF. It tracks an index of metal and mining companies, excluding gold and silver.
PICK is a diversified fund with about 200 holdings; the top three are BHP Group, Rio Tinto Plc, and Vale. The top five stocks include Glencore Plc, the world’s largest cobalt producer. The fund also owns cobalt-focused stocks like China Molybdenum, but, all-in, cobalt holdings are under 5% of assets.
Around 50% of the fund is in diversified metals and mining, followed by steel (30%), copper (10%), aluminum (5%), and precious metals (3%). So cobalt is likely less than 1% of the ETF’s assets, and this fund is not the best way of investing in the climate transition.
SPDR S&P Metals & Mining ETF (XME)
- Expense ratio: 0.35%
- Cobalt stocks (% of assets): 0%
With over $2 billion in assets, XME is a top metals and mining fund that invests in aluminum, coal, copper, diversified metals, gold, precious metals, silver, and steel. The fund has been around for 15 years and it costs only 0.35%.
However, XME is not a good way to bet on cobalt. XME’s top stocks are in steel (45% of assets), aluminum (10%), gold (10%), and coal and consumable fuels (15%). No large cobalt producers are on the list. And 15% of XME’s assets are in coal, which should deter most investors who want to position themselves for the clean energy revolution.
💰 Which cobalt ETF is best?
- Despite its small size, the newly launched VanEck Green Metals ETF (GMET) is the best ETF to get into cobalt and other green metals. We would avoid the traditional metals and mining ETFs which are environmentally unfriendly and mostly invest in metals like steel.
NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.
Invest in the climate transition. Sign up for our newsletter
Frequently Asked Questions
How can I invest in cobalt?
Is there a cobalt ETF?
There is no ETF that only invests in cobalt, but the VanEck Green Metals ETF (GMET) is a good choice if you want to get some cobalt exposure.