Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Functional Materials
Metals are crucial to our economy. Industrial base metals, such as copper, iron ore, and aluminum, are essential building blocks for infrastructure, buildings, appliances, vehicles, and other equipment. Many metals are also becoming vital for lower-carbon energy. Meanwhile, precious metals like gold and silver have industrial uses and are important for investors. These demand drivers should help boost metals prices in the future.
Investors have several metals and metal-related investment opportunities that could help them to profit from rising metals demand and prices. Of those options, exchange-traded funds (ETFs) offer an easy way to broadly invest in the metals sector. Here's a closer look at some of the leading metals-focused ETFs.
There are lots of ETFs focused on the metals and mining sector. Several ETFs focus on precious metals, including gold ETFs and silver ETFs. They provide investors with broad exposure to the precious metals mining sector or a specific precious metal.
Likewise, several ETFs concentrate on leading industrial base metals, such as aluminum, iron ore, and copper, plus emerging metals for the green energy sector such as lithium. Their strategies center on holding metals-focused mining stocks or metals futures contracts.
Here are some of the top ETFs focused on non-precious metals (check out this article for a list of precious metals ETFs):
The SPDR S&P Metals & Mining ETF seeks to provide investors with exposure to metals and mining stocks in the S&P Total Market Index. It holds shares of mining companies in the following subsectors of the metals and mining sector: Aluminum, coal and consumable fuels, copper, diversified metals and mining, gold, precious metals and minerals, silver, and steel. The ETF had 32 holdings as of early 2024, led by the following five:
The ETF uses an equal-weight strategy, which provides investors with targeted exposure to the entire U.S. metals and mining sectors, including precious metals. It charges a relatively low ETF expense ratio of 0.35%. The ETF is ideal for people seeking an investment focused on the U.S. metals sector.
The iShares MSCI Global Metals & Mining Producers ETF offers investors targeted access to the global metals and mining industry, minus precious metals. The ETF held shares of 218 mining stocks as of early 2022, led by the following five:
The ETF takes a market-weighted approach to the global non-precious metals mining sector. It charges a reasonable expense ratio of 0.39%. The fund's features make it ideal for people seeking to invest in an ETF weighted toward the largest non-precious metals miners in the world.
The VanEck Rare Earth/Strategic Metals ETF provides investors with targeted exposure to companies focused on producing, refining, and recycling rare earth and strategic metals and minerals. The ETF held shares of 33 rare earth and strategic metals companies as of early 2024, led by the following five:
The ETF allows investors to own a basket of companies focused on mining materials that are important for the technology and green energy sectors. It charges a modest fee of 0.54% for access to these emerging metals.
The Invesco DB Base Metals Fund enables investors to invest in commodity futures in a convenient and cost-effective way. The fund focuses on some of the most liquid and widely used base metals, such as aluminum, zinc, and copper. As of early 2024, the fund's holdings were:
The ETF uses leverage and collateralizes futures contracts with U.S. Treasury bills and other Invesco products built around government debt.
The fund is somewhat speculative since futures contracts can be very volatile. It charges investors a modest expense ratio of 0.77%. The ETF is best for sophisticated investors who want to make a short-term trade on the thesis that base metals prices will rise sharply in the near term.
Investing in metals and metals ETFs isn't for everyone. Investing in the sector has several pros. A big one is that rising demand for metals tends to drive up prices over the long term. That provides investors with the opportunity to make money on the metals market. Metals can also be a good way to hedge against inflation. Investing in metals ETF enables investors to broadly invest in the thesis that metals prices will rise.
However, metals have drawbacks. Prices can be volatile, especially during an economic downturn. Meanwhile, they often aren't a perfect hedge against inflation, so investors need to carefully consider whether investing in a metals ETF is right for their situation.
This safe-haven metal can be a precious investment.
Lithium is used in batteries, among other applications. Get in on the industry with these companies.
Mining companies find and extract materials and minerals. Can you dig it for your portfolio?
This precious metal is widely used in industrial applications.
Investing in metals over the short term can be worthwhile. For example, precious metals can be a good hedge against inflation. Meanwhile, industrial metals (copper, aluminum, and iron ore) rise in value when demand is growing, which tends to happen during periods of economic expansion when demand outpaces supply.
Vanguard offers the Vanguard Global Capital Cycles Fund (NASDAQMUTFUND: VGPM.X). The fund aims to invest at least 25% of its assets into precious metals and mining securities. The fund also invests in companies that own high-quality infrastructure (e.g., utilities and telecommunications).
It has historically been better to invest in stocks over precious metals. As of early 2024, the S&P 500 had delivered a more than 220% total return (12.4% annualized) over the last decade. That compared to 85% for gold (6.5% annualized) and 25% for silver (2.2% annualized). While the past performance of stocks doesn't guarantee they will continue to be a better investment than precious metals, stocks should continue to outpace gold and silver in the future unless there's a significant inflation surge or severe global economic downturn and financial crisis.
Why do we invest this way? Learn More
Market-beating stocks from our award-winning analyst team.
Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/22/2024.
Discounted offers are only available to new members. Stock Advisor list price is $199 per year.
Calculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.
Making the world smarter, happier, and richer.
© 1995 - 2024 The Motley Fool. All rights reserved.
Titanium Tungsten Sputtering Target Market data powered by Xignite and Polygon.io.