Boy, has it been a disappointing month for the ETFS Battery Tech & Lithium ETF (ASX: ACDC). Not only have ACDC units lost a nasty 1.3% so far today, but this ASX exchange-traded fund (ETF) has lost close to 7% of its value over the past month or so. Indeed, since 17 January, ACDC is down by almost 7.5%.
By comparison, the ASX 200 has also faced some choppy waters recently. But over the past period, the ASX 200 has barely lost 2.1%, making ACDC a definite market-trailer.
So what might have gone so wrong for this future-facing ETF? Well, to answer that, let's take a look at how this ETF is bolted together.
The ETFS Battery Tech & Lithium ETF tracks the Solactive Battery Value-Chain Index. This, in turn, aims to give investors exposure to "the energy storage and production megatrend". On the latest data, this ETF had 32 underlying companies in its investment portfolio. Close to 24% of those holdings hail from Japan, with the United States representing another 19.4%, South Korea 11%, and Australia 9.5%.
ASX investors would probably recognise ACC's two largest holdings as well – Mineral Resources Limited (ASX: MIN) and Pilbara Minerals Ltd (ASX: PLS). These two miners hold an ACDC weighting of 4.8% and 4.7% in this ETF respectively. Other holdings in this ETF include carmakers Nissan Motor Co and Renault SA, as well as weapons company Lockheed Martin.
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Short circuit? Why the ACDC ETF has struggled lately…
Looking at Mineral Resources, we can immediately see a source of red ink for this ETF. Minerals Resources shares have had a shocker over the past couple of months. This company is down around 20% since 17 January and remains down by more than 11% year to date.
Pilbara Minerals hasn't done too much better. The lithium producer's shares are down more than 17% since 17 January, and also remain down around 11.8% so far in 2022.
So with ACDC's two largest holdings going backwards by double-digits over the past month or so, not to mention the volatility we have seen across global markets since then too, it's perhaps no surprise ACDC units have been under the pump recently.
But longer-term shareholders are still sitting rather well. Even after this much-to-be-desired recent performance, this ASX ACDC ETF has still given its investors an average return of 30.58% per annum over the past 3 years.
The ETFS Battery Tech & Lithium ETF charges an annual management fee of 0.69%.
