The global race to secure critical minerals is continuing as the European Union (EU) ramps up its efforts to do just that. In effect, this should provide more growth prospects for ETFs that focus on critical minerals investments.
Rather than rely on certain countries such as China, the EU is looking to shore up its own critical minerals supply chain amid a global transition to alternative energy sources.
“European lawmakers are accelerating efforts to secure the critical mineral supply chains essential to powering the energy transition and high-tech defense, reflective of a broader awakening overtaking Europe as governments rush to de-risk ties with China amid fears of strategic vulnerabilities,” a Foreign Policy article said.
That acceleration has been rapidly increasing the past few years, especially when it comes to the EU weaning itself from heavy reliance on China. In response, the EU has been partnering with other nations to form key partnerships with those that are abundant with critical minerals supply.
“The thinking has been there for well over a decade that Europe needs to do something about these dependencies on critical minerals,” said Luke Patey, a senior researcher at the Danish Institute for International Studies, per the Foreign Policy article reference. “But it’s only been in the last few years that policy language has been formulated on what to do.”
Capture Critical Minerals Growth
For investors who are looking for opportunities in critical minerals for long-term growth or even traders eyeing short-term profit opportunities, individual stocks that can capitalize on critical minerals is an option. However, getting exposure to one ETF that captures this opportunity is an easier solution.
A pure-play critical minerals fund worth considering is 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.
It’s no secret that the overall demand for these minerals is projected to rise. With it, the demand for miners who materially affect the global supply will also increase, and SETM provides investors access to miners producing key critical minerals like lithium for electric vehicles (EVs).
For global exposure, the fund offers deep diversification when it comes to country exposure as well as market capitalization. Canada, the United States, and Australia round out its top three country allocations. The fund spreads its assets over large-, mid-, and small-cap companies to offer a balanced market-cap blend.
For more news, information, and analysis, visit the Gold/Silver/Critical Materials Channel.
