There’s an ETF for That? Rare Earth Metals

VanEck Rare Earth and Strategic Metals ETF

REMX

REMX is the more established option in this niche. The fund dates back to October 2010 and, as of December 15, has grown to roughly $1.55 billion in assets under management, making it the clear incumbent in the rare earth ETF space.

REMX is a passive ETF that tracks the MVIS Global Rare Earths & Strategic Metals Index. To be included in the index, a company must derive at least 50% of its revenue from rare earth elements or other strategic metals. That screen creates a portfolio that is far more concentrated than most materials ETFs.

It also explains one of the defining characteristics of REMX: significant exposure to China. This comes through not only via China H-shares, which are mainland-listed companies accessible to foreign investors, but also select A-shares accessed via the Shanghai–Hong Kong Stock Connect program.

In practical terms, this means a meaningful portion of the portfolio is tied to Chinese producers that operate under a very different regulatory and political framework than Western-listed miners.

The ETF holds 33 companies, many of which will be unfamiliar to most investors. A few names may ring a bell, such as Albemarle Corp., which is involved in lithium production, or Lithium Americas Corp., but the bulk of the portfolio consists of highly specialized producers like China Northern Rare Earth Group and Xiamen Tungsten.

This is also where investor due diligence becomes more important than usual. Many of REMX’s constituents are non-U.S. companies, some operating in jurisdictions where disclosure standards and shareholder protections differ materially. Risks such as export controls, state intervention, or even nationalization are not hypothetical in this space and should be considered part of the investment case.

From a fundamentals perspective, REMX skews toward mid-cap companies, with a weighted average market capitalization of about $7.2 billion. Valuations are elevated, with the portfolio trading at roughly 32 times trailing earnings, reflecting high growth expectations.

Volatility is also a defining feature. The ETF carries a beta of 1.67 versus the S&P 500, underscoring how sensitive it is to shifts in sentiment, commodity prices, and geopolitical developments. While roughly 40% of the portfolio is U.S. dollar–denominated, investors are also taking on meaningful exposure to the Australian dollar at around 29% and the Chinese renminbi at about 19%.

Performance for REMX tends to be boom-or-bust. Earnings across the portfolio are uneven, profitability is inconsistent, and returns are often driven by supply disruptions, policy announcements, or sudden changes in demand expectations rather than steady cash flows. That makes the ETF highly cyclical and unsuitable for investors seeking stability or income.

That said, for investors specifically looking for pure-play exposure to rare earth metals, REMX remains the benchmark option. It is reasonably priced for a niche thematic ETF, with a 0.58% net expense ratio.

Sprott Critical Materials ETF

SETM

SETM previously traded under a different name. Prior to October 1, 2024, it was known as the Sprott Energy Transition Materials ETF. The rebrand to “Critical Materials” did not change the fund’s investment objective, index methodology, or ticker. Both the ETF and its benchmark were renamed, but the underlying strategy remains intact. Today, SETM tracks the Nasdaq Sprott Critical Minerals Index.

This fund represents Sprott’s more expansive, multi-metal approach. The firm is best known for its metal-specific closed-end funds and mining-focused ETFs, while SETM serves as a broader “buy-it-all” option across materials critical to electrification, energy security, and industrial demand. Unlike REMX, SETM is not a pure-play rare earth ETF. Instead, it groups its exposure across three related themes.

The energy storage sleeve targets materials such as lithium, nickel, manganese, cobalt, and graphite, all of which are central to battery technology. The electricity generation theme includes uranium, silver, and rare earth elements, reflecting inputs required for nuclear power, solar, and advanced energy systems. The electricity transmission theme focuses primarily on copper, which remains essential for grids, wiring, and electrification infrastructure.

From a geographic standpoint, SETM differs meaningfully from REMX. Although the portfolio still consists largely of mining companies, Chinese exposure is materially lower. Instead, the ETF tilts more heavily toward Australia, the United States, and Canada, largely because rare earths are not the dominant driver of the portfolio.

According to Sprott’s breakdown, lithium is the largest material exposure at 27%, followed by uranium at 19.8% and copper at approximately 18.9%. Rare earth elements rank fourth at 14.5%, reinforcing that this is a diversified critical materials strategy rather than a focused rare earth play.

That broader scope also shows up in the portfolio’s structure. SETM holds 87 companies, compared with REMX’s far narrower lineup, and has a weighted average market capitalization of $12.9 billion, which skews more toward large-cap miners. That said, mining remains a mid-cap-heavy industry, and about 42% of the portfolio still falls in the $2 billion to $10 billion market-cap range, consistent with the sector’s characteristics.

The trade-off for that breadth is cost. SETM carries a 0.65% expense ratio, higher than REMX’s 0.58%. Even so, given the range of exposure across multiple critical minerals and geographies, the fee is reasonable for a niche thematic ETF.

In short, SETM is not the right choice for investors seeking pure-play rare earth exposure. However, for those who find REMX’s concentration, volatility, and emerging-market exposure unappealing, SETM offers a more balanced alternative.

Please note that this article reflects the author’s personal views and does not represent the opinions of the publication or its affiliates. It is for informational purposes only and does not constitute investment advice. It is essential to seek guidance from a registered financial professional before making any investment decisions.