With the global transition to alternative energy sources, it’s no secret that critical minerals can move the needle when it comes to growth exposure, but exchange-traded fund (ETF) investors want to know exactly where these opportunities exist. ETF provider Sprott has a pair of funds to begin and end that search.
From global policy initiatives that countries are increasingly adopting as part of their core emissions goals to the building out of infrastructure to support the continuous digital technology evolution, a confluence of factors are propelling demand for critical minerals. This is all encapsulated succinctly in a Uranium and Copper: The Elements of Energy report created by Sprott leadership.
With the move toward more electric vehicles (EVs) and the need to maintain their charge, the demand for electricity will also increase the need for copper, given its conductivity properties. As such, this can translate into growth opportunities for copper mining, or more specifically, the Sprott Junior Copper Miners ETF (COPJ). The fund tracks the Nasdaq Sprott Junior Copper Miners Index, which incorporates mid-, small-, and micro-cap companies entrenched in copper-mining-related businesses, giving investors additional growth exposure.
An increasing global adoption is taking place when it comes to using nuclear power as a viable and safe energy source, eschewing past stigmas related to its usage. As this adoption continues, it sets the stage for the need to mine more uranium. That said, another opportunity exists in the Sprott Uranium Miners ETF (URNM), which tracks the North Shore Global Uranium Mining Index. It invests in global firms that mine, develop, and produce the metal as well as firms that hold the physical metal or royalties from it.
Have It All in One ETF
If investors aren’t looking to drill down on mineral-specific miners, they also have all-encompassing options. One fund can provide blanket exposure to critical minerals, and that’s the Sprott Energy Transition Materials ETF (SETM).
The fund seeks to provide results that correspond to the total return performance of the Nasdaq Sprott Energy Transition Materials Index. That index essentially tracks the performance of a selection of global securities in the energy transition materials industry
With the overall demand for these minerals projected to rise, the demand for miners that materially affect the global supply will also increase. SETM gives investors exposure to equities across a variety of countries, adding additional diversification. Over 50% of the fund (as of February 29) focuses on uranium- and copper-focused equities, providing emphasis to the aforementioned growth catalysts.
For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.
