What’s Behind Surging Rare Earth Elements ETFs?

Everyone knows Big Tech is booming, but what about the minerals it depends on?

The rare earths industry is taking off, and investors are noticing. The stocks of companies like Arafura Rare Earths, Lynas Rare Earths and MP Materials, which mine and refine the metals that help power everything from smartphones to wind turbines, have all more than doubled this year (with some climbing well beyond that), and ETFs investing in the companies have garnered massive inflows. (VanEck’s Rare Earth and Strategic Metals ETF, REMX, brought in more than $200 million week over week as of Monday.) The boom reflects both political and technological developments — rare earths are now being used in AI infrastructure — and should be taken seriously by investors, experts said.

“I think we see the tailwinds continuing for the foreseeable future, in addition to this newfound pocket of demand from data centers and AI,” said Nate Miller, vice president of product development at Amplify.

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Part of the recent surge stems from an agreement signed by President Trump and the Australian Prime Minister on Monday to invest $3 billion into the sector over the next six months. The US government has also pledged to ban Chinese sourcing for certain metals by Jan. 1, 2027, which is all the more reason for US investors to shift their dollars away from Chinese supply chains, said Daniel O’Connor, CEO of the media and intelligence platform Rare Earths Exchanges. (The company is working on launching an ETF that would invest in the rare earth supply chain outside of China, which also tightened restrictions on exports earlier this month.) “Right now, a little under 100% of heavy rare earth elements are processed in China,” O’Connor said. “What this means is if the US military needs to develop something and they don’t have access, they’re out of luck … So there’s enormous pressure [to diversify].”

ETFs investing in rare earths companies have outperformed of late:

• VanEck’s Rare Earth and Strategic Metals ETF (REMX), which provides broad sector exposure, investing in mining companies and tech providers, is up 85% YTD.
• Amplify’s Lithium & Battery Technology ETF (BATT), which invests in the metals that go into batteries, is up 48% YTD.
• The iShares MSCI Global Metals & Mining Producers ETF (PICK), which tracks an index of mining and production companies, is up 34% YTD.

Silver and Gold … And Lithium: Miller says rare earths can play an important supporting role in investors’ portfolios. “In the same way somebody might think about an allocation to gold or silver in a complementary sense, you could think about [rare earths] here as adding further diversification,” Miller said. “When other things are treading water or aren’t performing well, you can see really strong returns out of these companies and the materials behind them.”