Response from Solactive Battery Value ETF27 Nov 2020 13:19
Solactive's Battery Value ETF
"Thanks for you email and interest. The topic is in definitely very interesting, not only from a technical point of view, but also for investors. The attention increases and, for example, we were cited in the following article:
https://expertinvestoreurope.com/what-are-the-prospects-for-battery-investments/
Thanks for your question regarding battery-grade vanadium producers. The industry is very dynamic and new applications as well as technologies will likely continue to arise. Although the battery industry is evolving at a fast pace, we need to stick to the rules in a passive index. There is not really a way to overcome the rules written down in the guideline of an index.
Please have a look at:
https://www.solactive.com/indices/?se=1&index=DE000SLA33F4
and
https://www.solactive.com/wp-content/uploads/2020/09/Guideline_SOLBATT_v1.2.pdf
In this index, we rely on two external data providers, and the selection of constituents is only performed once a year, in May. As of today, we cannot tell (we do not know), whether certain companies will be included in May.
However, given the tremendous outperformance since the beginning of the year, I consider the index as a good reflection of a very important future technology.
I hope this helps. Let me know if you have further questions.
Best regards,
Axel
Dr. Axel Haus
Solactive AG | Research
T: +49 69 719160-319"
As you'll see the "Index Universe" is defined as follows, and sadly it seems this cannot be changed now the ETF is set up! Very frustrating they said the mining companies must produce lithium!
"1.10 Index Universe
On each Selection Day that occurs in the month of May, the Index Universe shall be determined by the Calculation
Agent as described below. On each Selection Day that occurs in the month of November, the Index Universe shall
remain unchanged from the Index Universe determined on the immediately preceding Selection Day.
The list of companies whose Securities make up the Index Universe is determined using two data sources:
(a) Data Provider I for determining companies that are electro-chemical storage technology providers;
and
(b) Data Provider II for determining mining companies that produce Lithium.
On each Selection Day that occurs in the month of May, the Calculation Agent shall determine the Index Universe
which shall comprise of Securities of:
(a) each publically listed Energy Storage Technology Provider that is not a Utility Provider; and
(b) each publically listed Mining Company that is classified as a Producer."
This suggests to me that the only way vanadium producers will be included within Index-tracking ETFs if those creating the ETFs think of vanadium before it is too late.
Fortunately, having now brought this to the attention of a few providers (L&G, WisdomTree, Rize, etc), there will be an ETF created that specifically includes vanadium producers like BMN.
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