Key takeaways:

• Both the Betashares Energy Transition Metals ETF and the Global X Green Metal Miners ETF were admitted to the ASX in late 2022.

• As far as diversification, XMET’s net assets are more concentrated among its top 10 holdings, and GMTL also features a larger number of holdings, albeit the latter has notable exposure to one geographic region (China).

• There is no difference in management fees between the two ETFs, and their distribution policies are similar, however, XMET has delivered superior returns since inception.

As governments around the world embark on efforts to achieve net zero emissions by 2050, decarbonisation strategies are gaining greater importance, and also becoming a major focal point for both the public and private sectors.

One of the main areas expected to play an essential role in the transition from fossil fuels to clean energy sources is the critical minerals industry, with a number of raw materials deemed essential components in the development of clean energy technologies.

Global markets feature a number of companies involved in energy transition metals, and the ASX features two ETFs dedicated to this theme - Betashares Energy Transition Metals ETF (ASX: XMET) and Global X Green Metal Miners ETF (ASX: GMTL). 

The above ETFs focus on specific mining entities involved in sourcing critical minerals, as opposed to other clean energy ETFs like the VanEck Global Clean Energy ETF (ASX: CLNE) and the Global X Battery Tech & Lithium ETF (ASX: ACDC), which focus more so on the technology behind the transition to clean energy, and which will be the subject of a future analysis.

Without further ado, here are the key facts and figures comparing XMET and GMTL.

Fund Objective

The Betashares Energy Transition Metals ETF aims to track the performance of an index, before fees and expenses, that provides exposure to a portfolio of global companies in the energy transition metals industry. 

More specifically, XMET provides exposure to global producers of copper, lithium, nickel, cobalt, graphite, manganese, silver, and rare earth elements. The fund tracks the Nasdaq Sprott Energy Transition Materials Select Index.

On the other hand, the Global X Green Metal Miners ETF seeks investment results that correspond, generally, to the performance, before fees and expenses, of the BITA Global Green Energy Metals Index.

GMTL invests in critical minerals shares, offering diversified exposure to the materials sector via strategic allocations to ‘green’ metals such as lithium, copper, nickel, and cobalt.

Fund Profiles

As two relatively ‘new’ funds to the ASX, both XMET and GMTL hold a modest sum of assets under management. The former is the larger of the duo, with $28.0 million in net assets at the time of writing. In contrast, GMTL oversees approximately $3.0 million in assets under management.

The ‘ASX Investment products monthly report’ for April 2024 shows that the Betashares Energy Transition Metals ETF recorded a $5.8 million increase in funds under management (FUM) last month, with $2.9 million courtesy of fund inflows. 

According to the ASX, the Global X Green Metal Miners ETF recorded a more modest increase in assets, with its FUM growing by $0.3 million throughout April.

Between the pair, trading was relatively subdued across all ASX trading (broker) participants. In total, there were circa 700 trades between the two products focusing on ‘green’ transition metals. 

It should be noted, XMET and GMTL were both admitted to the ASX in October 2022, which means the two products have been established for a little over 18 months.

Fund Holdings

While both ETFs provide exposure to green metals expected to play a leading role in the transition to clean energy solutions, there is a slight variance to the holdings within each fund.

Betashares’ Energy Transition Metals ETF provides global exposure to ‘pure play’ producers of a range of energy transition metals, as well as other companies involved in the recycling and processing of these raw materials. 

A key investment threshold for XMET is that companies must generate a “significant percentage” of their revenue from a single commodity within the energy transition metals industry. Companies will not be considered for investment if their revenue from certain business activities like oil and gas production, or thermal coal extraction, exceed a defined materiality threshold. Betashares will also exclude companies non-compliant with the UN Global Compact principles, or if the share has a “Severe” controversy rating as defined by Sustainalytics.

As noted earlier, XMET includes global producers of copper, lithium, nickel, cobalt, graphite, manganese, silver, and rare earth elements. Regional exposure spans the likes of Canada (15.7%), Chile (15.0%), Australia (14.4%), United States (11.6%), as well as numerous other countries.

The Global X Green Metal Miners ETF focuses on clean energy and infrastructure related to a smaller cohort of ‘green’ metals, including lithium, copper, nickel, and cobalt. It tracks a global basket of companies which extract, process, and trade metals and minerals which the International Energy Agency (IEA) has deemed to be critical for the clean energy transition.

According to the rules-based index GMTL follows, at least 50% of a company’s revenue must be derived from green metals to be considered for inclusion, and a series of environmental criteria are used for screening. A modified free float market capitalisation algorithm is used to determine weightings, with a maximum allocation for any given holding of 7%. The number of shares associated with each commodity is capped at ten to ensure diversification, with rebalancing occuring semi-annually.

Regional exposure within GMTL is skewed towards China, with the country representing 35.3% of the weight of the fund’s investments. Nonetheless, this ETF also offers exposure to Canada (16.2%), United States (10.7%), and Australia (8.1%), among a number of other countries.

At the time of writing, XMET holds shares in 31 unique companies, while GMTL has 46 unique holdings. The top 10 holdings account for 53% and 46% of the net assets of each fund, respectively.

Note: all holdings rounded to 1 decimal place
^ = as at May 21, 2024; * = as at May 22, 2024

Performance and Distributions

Since the pair were only admitted to the ASX in late 2022, there is limited performance data available for these ETFs.

Nonetheless, over the last year, XMET returned 0.15%, and since inception the fund has yielded an average return of 2.56% per annum. Betashares data shows that the Nasdaq Sprott Energy Transition Materials Select Index has returned, on average, 8.19% per annum over the last three years.

For GMTL, the fund returned -10.39% over the last 12 months, with its performance since inception only slightly better, at -8.43% per annum.

Over a five-year timeline, Global X calculated ‘simulated’ performance data for the BITA Global Green Energy Metals Index, which shows an average return of 9.0% per annum. However, it should be noted that these returns are theoretical and do not include the impact of fees or costs of investing.

Investors should note that past performance is not indicative of future performance, and these results do not provide any guarantee that future returns will be of the same magnitude, or that returns will be positive.

According to Betashares, the Energy Transition Metals ETF pays distributions “at least annually”, with Global X noting that the distribution frequency for the Green Metal Miners ETF is “annually”.

Fees

Both the Betashares Energy Transition Metals ETF and the Global X Green Metal Miners ETF feature the same management fee, which is currently 0.69% per annum.

Management fees are calculated in relation to the net asset value (NAV) of each fund on a daily basis, and prospective investors should note that other fees may apply. 

Please refer to the relevant Product Disclosure Statements for up-to-date details on costs and expenses, which may be deducted from the fund’s assets as and when they are incurred.

Summary

Both the Betashares Energy Transition Metals ETF and the Global X Green Metal Miners ETF are recent admissions to the ASX, each listing in October 2022. Since then, however, XMET has become the significantly larger of the two funds, even if its net assets remain relatively modest compared with other ASX-listed ETFs.

In terms of composition, 53% of net assets within Betashares’ XMET are spread across the fund’s top 10 holdings, compared with 46% for Global X’s GMTL. Furthermore, the latter is exposed to a greater number of holdings, but a regional bias towards China. Meanwhile, both ETFs attract the same management fee (0.69% p.a.), and offer similar distribution policies, albeit XMET has delivered a superior level of performance since inception.

For more information, you can read about the Betashares Energy Transition Metals ETF here, and the Global X Green Metal Miners ETF here. Before investing in any ETFs, you should consult the respective Product Disclosure Statement, which will be available on the fund’s website.