BlackRock has unveiled a thematic commodities ETF providing futures-based exposure to metals that are critical to clean energy technologies.

The ETF provides exposure to metals used extensively within electric vehicle batteries, fuel cells, solar panels, and wind turbines.

The iShares Transition-Enabling Metals ETF (TMET US) has been listed on Nasdaq with an expense ratio of 0.47%.

The fund is linked to the performance of the ICE Clean Energy Transition Metals Index which consists of metals determined by ICE Data Indices’ index advisory committee to have current or expected future usage in electric vehicle batteries, fuel cells, solar panels, and wind turbines.

Commodities that are selected for the index are weighted based on an equal combination of liquidity (measured by the trailing 1-year average daily traded volume of the metal’s underlying futures contracts) and global production (measured by worldwide dollar production volume in the most recent calendar year).

As of the end of September, the index consisted of roughly 30% allocations to copper and aluminum, followed by silver (18.3%), nickel (10.1%), zinc (9.7%), and platinum (4.0%).

The diversified allocation strategy ensures that investors are not overly reliant on any single metal, enhancing the ETF’s resilience against volatilities in any specific market.

The ETF gains its exposure to each metal by investing primarily in futures contracts expiring in the next three to four months.

Commodities, in general, have historically shown low correlations with stocks and bonds. By incorporating exposure to real assets like commodities, investors can create more balanced portfolios and mitigate risks associated with market fluctuations.

TMET, in particular, may appeal to investors seeking a more environmentally responsible commodities exposure, one that taps into a strategy that not only avoids fossil fuels but is powered by the long-term secular theme of decarbonization.