Asset manager VanEck has listed Europe’s what it describes as the first ETF that gives investors access to companies that mine and process rare earths or so-called strategic metals – the VanEck Vectors Rare Earths and Strategic Metals UCITS ETF on London Stock Exchange.
The firm writes that whether electric cars, wind turbines, satellite components, microchips or LCD televisions, all modern technologies are inconceivable without strategic metals, which include rare earths.
“Especially for technologies like these, which are crucial for combating climate change, these raw materials play a major role,” says Martijn Rozemuller, CEO at VanEck Europe. “Strong magnets, such as those installed in wind turbines or electric motors, require, among other things, neodymium, which belongs to the rare earth. Lithium is a fundamental raw material for modern batteries used in electric cars. As the decarbonisation of the economy continues, there is now fierce competition for these raw materials. The demand is already high and will certainly increase in the future.”
Investment opportunities arise for investors from the companies that mine and process rare earths and strategic metals. The VanEck Vectors Rare Earths and Strategic Metals UCITS ETF now gives investors in Europe simplified and diversified access to these companies whose products play a key role in the technological and environmental future.
Currently, about 44 elements in the periodic table are considered rare earths or strategic metals, including cobalt, manganese, tungsten or titanium, which is used in smartphones as well as in airplanes and rockets. “While rare earths are found all over the world, their “rarity” stems from the fact that they are difficult to mine – they never occur in high concentrations and are usually mixed with other elements,” Rozemuller says. “That’s why this industry is also about companies that are very specialised and might be rather unknown and inaccessible to most investors. With our ETF, they can bring these companies into the portfolio in a diversified way and benefit from the continued growing importance of these key commodities.”
The ETF’s assets may be concentrated in one or more particular sectors or industries. The ETF may be subject to the risk that economic, political or other conditions adversely affecting the relevant sectors or industries may adversely affect the performance of the Fund to a greater extent than if the Fund’s assets were invested in a wider variety of sectors or industries.
The physically replicating ETF includes a global selection of companies that derive at least 50 per cent of their revenue from rare earths and strategic metals. The selection is adjusted quarterly. The VanEck Vectors Rare Earths and Strategic Metals UCITS ETF is accumulating and has a total expense ratio (TER) of 0.59 per cent.