KraneShares Electrification Metals Strategy ETF

KMET

Market cap $2.61M

Climate and the energy transition remain highly politicized topics in the U.S. Regardless of sentiment , however, the energy transition is well underway globally. Investors wanting to harness the outsized return potential of the energy transition should look to both carbon markets and electrification metals.

Persistent core inflation lends credence to the market's anticipation of rate cuts holding off until June. Once interest rate cuts kick in, however, commodities look particularly well-positioned given historical performance.

Electrification metals play a crucial role in fueling the energy transition. Metals like lithium, nickel, copper, and cobalt are crucial for EV manufacturing, while aluminum, copper, and zinc are must-haves for low-carbon power generation.

Gold prices reached an all-time high earlier this month, and though prices retreated in the ensuing days, gold remains at a premium. For investors looking for bullish commodity opportunities beyond gold, electrification metals are worth consideration.

The reduction in global demand as economies struggle with inflation and recession continues to weigh heavily on several asset classes. Electrification metals suffered from supply and demand misalignments in the economic pullback of the last year.

Renewable energy equities are struggling. That is highlighted by sour performances in related ETFs over the course of 2023 and starting 2024.

Some commodities performed admirably last year. Others did not.

Ongoing adoption of electric vehicles and other forms of renewable energy will likely continue in 2024. That may provide support for non-precious metals commodities strategies.