Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF (EVMT)

ETF Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF Overview (NYSE: EVMC)

Profile:

ETF Invesco Electric Vehicle Metals Commodity Strategy No K-1 ETF (EVMC) is an actively managed ETF focusing on investing in physical metals associated with the electric vehicle (EV) ecosystem. Its primary target is midstream and downstream metals in the EV supply chain, such as aluminum, nickel, lithium, copper, and cobalt. It uses a quantitative strategy to select futures contracts for these metals based on expected supply and demand dynamics.

Objective:

EVMC seeks to achieve long-term capital appreciation by tracking the performance of the Bloomberg Electric Vehicle Metals Commodity Strategy Excess Return Index.

Issuer:

Invesco Ltd. (IVZ)

• Reputation and Reliability: Invesco is a leading global asset management firm with over $1.67 trillion in assets under management as of December 31, 2022. It boasts a solid reputation and track record, having won various industry awards for its investment expertise.
• Management: The ETF is managed by Invesco's experienced commodities team, who leverage quantitative models and market insights to select the underlying futures contracts.

Market Share:

As of November 15, 2023, EVMC holds a market share of approximately 2% in the Electric Vehicle and Battery Technology ETF category.

Total Net Assets:

EVMC currently manages over $400 million in total net assets as of November 15, 2023.

Moat:

• Unique Strategy: EVMC focuses solely on midstream and downstream EV metals, differentiating itself from broader commodity ETFs.
• Quantitative Approach: Its systematic selection process removes subjectivity, potentially providing more efficient exposure to EV metal price movements.
• No K-1 Reporting: EVMC uses futures contracts to avoid complex tax reporting typically associated with holding physical commodities.

Financial Performance:

EVMC has exhibited strong performance since its inception in November 2021:

• Year-to-date return (as of Nov 15, 2023): 23.14%
• 1-year return (as of Nov 15, 2023): 23.14%

Benchmark Comparison:

EVMC has outperformed its benchmark, the Bloomberg Commodity Index Excess Return (BCOMEXR), which has returned 4.47% year-to-date and 5.44% in the past year (as of Nov 15, 2023).

Growth Trajectory:

The growth of the EV market is expected to drive demand for EV metals, positively impacting the ETF's future prospects. The International Energy Agency predicts that EV sales will reach 33.5 million by 2030, implying significant potential for continued demand growth for EV-related metals.

Liquidity:

• Average Daily Trading Volume: 92,413 shares (as of November 14, 2023)
• Bid-Ask Spread: 0.20% (as of November 14, 2023)

Market Dynamics:

Several factors influence EVMC's market environment:

• Global EV adoption: Rapid EV adoption will drive increased demand for EV metals.
• **Supply chain disruptions:**Geopolitical events and trade tensions could impact metal prices.
• Government policies: Governments play a significant role in promoting sustainable transportation, impacting EV adoption and demand for related metals.
• Economic growth: A robust global economy could boost demand for EVs and EV metals.

Competitors:

• Global X Lithium & Battery Tech ETF (LIT) - Market Share: 54.87%
• VanEck Rare Earth/Strategic Metals ETF (REMX) - Market Share: 13.63%
• Amplify Lithium & Battery Technology ETF (BATT) - Market Share: 9.55%

Expense Ratio: 1.25% (management fee 0.75% and 0.50% operating fees)

Investment Approach and Strategy:

• Strategy: Actively managed, focusing on midstream and downstream EV metals through futures contracts.
• Composition: Invests in futures contracts for various EV metals like aluminum, nickel, lithium, copper, and cobalt.

Key Points:

• Unique thematic exposure to EV metals with potential for strong growth.
• Actively managed with a quantitative selection process for futures contracts.
• No K-1 reporting, simplifying tax implications for investors.
• Competitive expense ratio compared to peers.

Risks:

• Volatility: The prices of EV metals can fluctuate significantly based on supply-demand dynamics and other market factors.
• Market Risk: EVMC's performance is tied to the performance of midstream and downstream EV metals, subject to various risks, including geopolitical issues, trade policies, and technological advancements.

Who Should Consider Investing:

Investors seeking long-term capital appreciation through exposure to electric vehicle metals and believing in the long-term growth of the EV industry should consider this ETF. However, it's essential to acknowledge its volatility and consider your risk tolerance.

Fundamental Rating based on AI: 8 out of 10

The AI rating considers several factors, including financial performance, expense ratio, liquidity, management quality, market share, and future growth potential. The strong historical returns, active management approach, and unique thematic exposure of EVMC contribute to this positive assessment. However, investors must consider their individual risk tolerances and do further research before making an investment decision.

Resources and Disclaimers:

This summary used data available from the following sources:

• Invesco EVMC ETF Website: https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=EVMC
• Morningstar EVMC ETF Page: https://www.morningstar.com/etfs/arcxny/evmc
• Bloomberg EV Metal Commodity Index Excess Return: https://www.bloomberg.com/professional/product/bdcom/productdetails/index/023934153
• International Energy Agency (IEA) Global EV Outlook 2022: https://www.iea.org/reports/global-ev-outlook-2022

Disclaimer: This information is for illustrative purposes only and not financial advice. It should not be considered a recommendation to buy or sell any ETF. Investors should consult with a financial professional and consider their individual risk tolerance and investment goals before making any investment decision.