ETF Spotlight on Market Vectors Rare Earth/Strategic Metals (NYSEArca: REMX), part of a weekly series.
Assets: $160.3 million
Objective: REMX seeks to track the Market Vectors Rare Earth/Strategic Metals Index, a rules-based, cap-weighted index.
Holdings: REMX tracks a basket of global companies involved in mining, refining and manufacturing rare earth metals.
What You Should Know
- REMX is currently the only ETF that gives investors exposure to rare earth metals.
- Australia is 24% of the fund; Canada is 19.8%; and the United States is 18.8%.
- REMX debuted in October, and it’s already been a hit.
- Rare earths are a fairly new area for many investors; these metals are typically not traded on exchanges because they’re available in such limited quantities relative to other metals. [The Ins and Outs of Rare Earth ETFs.]
- Rare earth metals are those metals that are mined as byproducts of other precious and base metals.
- About 50 elements on the periodic table are considered strategic metals, which includes rare earth metals.
- Rare earth metals have a huge number of applications: they’re used in steel alloys, jet engines, weapons, hybrid vehicles, flat-scree TVs, fiber optics and more.
- The risk is that China controls 97% of rare earth production, though China is just 14.9% of REMX.
The Latest News
- China’s control of the rare earths market was demonstrated this week when the country announced it would cut exports of the metals by 35% next year, in order to keep some at home for their own industries.
- That’s on top of a 40% reduction in exports implemented this summer.
- Though China’s move is bad news for industries elsewhere that use rare earths, it’s been great for miners. Shares of Molycorp (NYSE: MCP), which is 4.1% of REMX, surged following the news.
- Since July, Molycorp’s stock has tripled. The corporation owns a mine in California that is scheduled to get back in business next year.
- Other top holdings have also gone gangbusters this year: Lynas, which is 9.8% of REMX, has gained 240% this year; Iluka, 9.3% of the ETF, has gained 151%.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.