Many investors are familiar with gold and silver and the ETFs that allow investment in those holdings, such as the SPDR Gold Trust (GLD) or the iShares Silver Trust (SLV). But what if you are looking for a way to achieve broad exposure to the Materials – Rare Earth/Lithium segment of the U.S. equity market? In that case, the VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) might be just the fund you are seeking. Currently the ETF is up 7.22% as of 2:30 pm ET on Monday, according to Yahoo Finance.
REMX seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Rare Earth/Strategic Metals Index (MVREMXTR), which is intended to track the overall performance of companies involved in producing, refining, and recycling of rare earth and strategic metals and minerals.
Strategic metals are crucial factors in the 21st century, as they are a part of industries as disparate as electronics, mobility, and sustainable energy. Strategic Metals include rare earth elements as well as specialty metals used in LEDs, magnets, electric motors, sensors and many other components used in smartphones, flat screens, cars, and our homes. Now they are becoming available for physical investment, including secure storage in bonded warehouses.
According to Nasdaq, the fund, which is sponsored by Van Eck, has amassed assets over $216.70 million, making it the largest ETF attempting to match the performance of the Materials – Rare Earth/Lithium segment of the U.S. equity market. REMX seeks to match the performance of the MVIS Global Rare Earth/Strategic Metals Index before fees and expenses.
The MVIS Global Rare Earth/Strategic Metals Index tracks the overall performance of companies involved in producing, refining, and recycling of rare earth and strategic metals and minerals.
“Compared to base metals, they have more specialized uses and are often more difficult to extract,” according to the VanEck website. Strategic metals are used in jet engines, hybrid cars, steel alloys, wind turbines, flat screen televisions and cellular phones. Rare earth metals, which are a subset of strategic metals, are 17 chemical elements used mainly in electronics.
Looking at individual holdings in REMX, China Molybdenum Co Ltd (603993 CH) accounts for about 7.41% of total assets, followed by Eramet (ERA FP) and Zhejiang Huayou Cobalt Co Ltd (603799 CH).
With a handful of Chinese names in the fund holdings as well, the REMX may provide an opportunity to participate in market movement based on the current trade war environment.
For more tactical investing plays, visit our Tactical Allocation Channel.
