Market Vectors Rare Earth/Strategic Metals (NYSEARCA:REMX)
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.
- 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%.