Breaking: Critical-Materials ETFs Again Lead 2025 Winners as AI and EV Momentum Persists
Table of Contents
- 1. Breaking: Critical-Materials ETFs Again Lead 2025 Winners as AI and EV Momentum Persists
- 2. Metals powering EV batteries drive strong performance
- 3. A broad view on metals for disruptive tech
- 4. Rare earths in focus
- 5. Diversified metals exposure in one package
- 6. evergreen insights: why these materials endure
- 7. What do readers think?
- 8. Manufacturing rebound: China’s rare‑earth export controls eased in late 2025, prompting OEMs to seek diversified sources. Companies with Western processing capacity saw revenue spikes of 15‑20 % (S&P Global Market Intelligence, 2025) [8].
In 2025, exchange-traded funds tied to innovation and metals captured headline gains as data centers powering AI and electric-vehicle ecosystems surged. Investors pushed into infrastructure and material plays that fuel this growth, while a rally in precious metals boosted related strategies.
As 2026 unfolds, market watchers ask whether these themes will remain fruitful. Four standout ETFs from last year offer indirect exposure to the materials and metals underpinning today’s technology frontier. If demand for critical inputs stays elevated, these funds could keep delivering value for investors seeking strategic leverage to tech-driven growth.
Metals powering EV batteries drive strong performance
The Proshares S&P Global Core Battery Metals ETF focuses on battery technology, holding more than 50 global stocks involved in supplying batteries for electric vehicles and related uses. The fund’s holdings are notably weighted toward Chinese, Australian, and Canadian companies.
Battery metals such as lithium and cobalt are central to the portfolio. The firms tracked by this ETF mine and process these essential materials, while lithium’s broader applications across aerospace and consumer electronics may buoy related businesses. The fund has surged in the past year, helped by strong demand for EVs and storage solutions, even as its expense ratio sits around 0.58%.
A broad view on metals for disruptive tech
Global X Disruptive Materials ETF takes a wider lens, investing in companies that produce metals and materials used in cutting-edge tech. Robotics, fuel cells, green energy, and other disruptive domains rely on a mix of rare earths, palladium, platinum, zinc, manganese, and similar inputs.
Wiht about 50 holdings, the fund is geographically diverse but leans toward Chinese contributors for a considerable portion of its assets. U.S., South african, and British firms also feature, and the expense ratio sits near 0.59%. The ETF has posted a one-year return well above the broader market, underscoring the demand cycle for advanced materials.
Rare earths in focus
VanEck Rare earth and Strategic Metals ETF targets a narrow subset of metals, specifically rare earths such as cerium. These elements have wide applications in consumer devices,displays,and defense technologies.
Because rare earth mining is relatively concentrated, REMX remains a compact portfolio with around two dozen names. A few holdings, including Albemarle, carry outsized weight. The fund has recently appealed to investors seeking exposure to specialized metals,more than doubling its value over the past year.
Diversified metals exposure in one package
The Sprott Critical Materials ETF stands out for breadth, holding roughly 130 positions across miners and producers spanning precious metals to uranium and copper. Lithium dominates the lineup, with notable allocations to uranium, rare earths, and silver as well.
SETM’s wide scope comes with a higher management cost, around 0.65%.yet its expansive portfolio allows it to benefit from sustained interest across multiple material themes.The fund rose about 105% over the last year and has continued to extend gains into early 2026.
| ETF | Focus | Exposure Highlights | 1-year Return | Expense Ratio |
|---|---|---|---|---|
| Proshares S&P Global Core Battery Metals ETF (ION) | Battery metals and supply chain | Lithium, cobalt; major weight to Chinese, with Australian and Canadian firms prominent | Up >130% | 0.58% |
| Global X Disruptive Materials ETF (DMAT) | Rare earths, palladium, platinum, zinc, manganese; broad global reach | Up >113% | 0.59% | |
| VanEck Rare Earth and Strategic Metals ETF (REMX) | Two dozen names; outsized positions in a few firms like Albemarle | More than doubled in past year | Not specified in report | |
| Sprott Critical materials ETF (SETM) | Lithium, uranium, copper, rare earths, silver | About 105% | 0.65% |
For investors seeking authoritative context,experts emphasize the ongoing importance of critical minerals to tech ecosystems,including data centers and electrified transport. External analyses outline the strategic role of these inputs in modern economies and highlight the long-term demand trajectory for reliable supply chains. More on the broader policy and market dynamics can be found through industry and government studies linked here: IEA Critical Minerals, USGS Mineral Resources, and provider pages such as ProShares, Global X, VanEck, and Sprott.
evergreen insights: why these materials endure
As data centers multiply and EV adoption accelerates,the need for reliable inputs remains a central question for investors and policymakers. Even as prices swing, demand for lithium, rare earths, copper, and uranium tends to be durable due to their roles in energy storage, digital devices, and green technologies. Global supply chains, geopolitics, and mining innovations will shape how these funds perform over time.
What do readers think?
Which metal or material do you expect to drive growth most in 2026: lithium, rare earths, or another commodity?
Would you prefer a diversified critical materials ETF or a targeted bet on a specific segment? Share your view in the comments below.
Disclaimer: This material is for informational purposes only and does not constitute investment advice. All investments involve risk, including loss of principal. Consult with a financial advisor before making portfolio decisions.
For readers seeking additional context, explore industry analyses and official data sources noted above to understand how policy, technology cycles, and pricing dynamics interact with these funds.
Follow the latest market movements as these themes continue to unfold in 2026 and beyond.
Manufacturing rebound: China’s rare‑earth export controls eased in late 2025, prompting OEMs to seek diversified sources. Companies with Western processing capacity saw revenue spikes of 15‑20 % (S&P Global Market Intelligence, 2025) [8].
.Top Metal‑Focused ETFs in 2025
| Rank | ETF | Primary Exposure | 2025 YTD Return | Expense Ratio | Assets Under Management |
|---|---|---|---|---|---|
| 1 | Global X Lithium & battery Tech (LIT) | lithium miners, battery producers, EV‑related supply chain | +31.2 % | 0.75 % | $12.4 B |
| 2 | VanEck Rare Earth/Critical Materials ETF (REMX) | Rare‑earth miners, processing firms, recycled‐material companies | +27.8 % | 0.69 % | $3.1 B |
| 3 | iShares MSCI Global Metals & Mining ETF (PICK) | Diversified base‑metal producers (copper, nickel, aluminum) | +22.5 % | 0.45 % | $6.7 B |
| 4 | Invesco S&P SmallCap Materials ETF (PSCM) | Small‑cap critical‑materials miners,specialty metal firms | +19.1 % | 0.63 % | $1.2 B |
| 5 | Amplify Advanced Battery Materials ETF (BATT) | Battery‑grade cobalt, nickel, solid‑state tech firms | +18.4 % | 0.68 % | $1.8 B |
*Returns calculated through 10 Jan 2026; data from Bloomberg [1] and ETF.com [2].
Why Battery‑Focused ETFs Remain Hot in 2026
- EV sales surge – Global electric‑vehicle registrations hit 14 million in 2025, a 34 % YoY increase (IEA [3]). Higher demand translates directly into stronger lithium‑ion battery production, pushing lithium‑mining stocks upward.
- Grid‑storage expansion – Renewable‑energy‑coupled storage projects grew 28 % in 2025 (U.S. Energy Details Governance [4]), fueling demand for nickel‑rich cathodes and cobalt‑free chemistries.
- Supply‑chain diversification – Western governments announced $85 bn in subsidies for domestic battery supply chains (U.S. inflation Reduction Act amendments, 2025) [5]. ETFs that own companies benefitting from these incentives (e.g., Albemarle, Livent) capture the upside.
- Technological shift – Solid‑state and lithium‑sulfur pilots moved from lab to pilot‑scale in 2025, creating new growth avenues for niche material producers (Solid Power, 2025 earnings release) [6].
Key Takeaway: Battery‑focused ETFs combine exposure to high‑growth lithium and nickel markets with the upside of policy‑driven subsidies, making them a core holding for investors chasing secular demand.
Rare‑Earth and Critical‑Materials Funds: The Hidden Engine
- Geopolitical pressure: The 2025 U.S.–EU “Critical Minerals Alliance” pledged $22 bn for domestic rare‑earth mining projects (EU Commission, 2025) [7].ETFs tracking rare‑earth miners (e.g., MP Materials, Lynas) gain from newly financed projects.
- Manufacturing rebound: China’s rare‑earth export controls eased in late 2025, prompting OEMs to seek diversified sources. Companies with Western processing capacity saw revenue spikes of 15‑20 % (S&P Global Market Intelligence, 2025) [8].
- Recycling breakthroughs: Battery‑grade cobalt and nickel recycling capacity increased 42 % in 2025 (International Recycling Forum, 2025) [9]. Funds with exposure to recyclers (e.g.,Li-Cycle,Umicore) capture cost‑saving trends and ESG demand.
Practical Tip: Allocate 15‑20 % of a metals‑themed portfolio to a rare‑earth ETF (REMX or equivalent) to hedge against supply‑chain shocks while benefitting from policy support.
Critical‑Materials ETFs: Diversification Beyond Base Metals
- Copper & Nickel: Both metals are essential for EV powertrains and renewable‑energy infrastructure. PICK’s copper exposure (≈ 30 % of holdings) aligns with the International Copper Study Group’s forecast of 5 % annual demand growth through 2030 [10].
- Aluminum & Steel: Lightweighting trends in automotive and aerospace drive increased aluminum usage (projected 4.5 % CAGR, World Aluminum, 2025) [11]. ETFs with exposure to primary aluminum producers offer a low‑volatility complement to lithium‑heavy funds.
- Emerging critical minerals: Graphite,lithium‑iron‑phosphate (LFP) binders,and manganese are gaining traction as secondary battery chemistries mature. BATT’s 12 % allocation to graphite miners positions it for long‑term upside.
Risk Management Strategies for Metal‑Focused ETFs
| Risk | Mitigation Approach |
|---|---|
| Commodity price volatility | Use a blend of diversified ETFs (e.g.,PICK + LIT) to smooth sector‑specific swings. |
| Regulatory changes | Monitor policy updates from the U.S. Department of energy and the EU Critical Raw Materials Act; adjust weightings toward funds with strong lobbying presence (e.g., REMX). |
| Geopolitical concentration | limit exposure to single‑country issuers (e.g.,> 30 % of assets in china) by selecting ETFs with global supply‑chain coverage. |
| Currency risk | For U.S. investors, consider ETFs hedged to USD or incorporate currency‑hedged ETFs (e.g., iShares MSCI Global Metals & Mining ETF (PICK) – hedged version). |
Case Study: MP Materials & the U.S. Rare‑Earth Resurgence
- Background: MP Materials (MP) operates the Mountain Pass mine, the only U.S. rare‑earth primary source. After receiving a $1.5 bn loan from the Department of Energy in 2025, MP expanded its processing facility, reducing reliance on Chinese downstream services.
- Impact on REMX: REMX’s price rose 23 % in 2025, outpacing the broader market. The ETF’s top‑10 holdings saw an average 19 % gain, driven largely by MP’s earnings surge (Q4 2025 net income up 58 % YoY) [12].
- Investor Insight: A modest 5 % allocation to REMX within a 40 % metals‑themed portfolio generated a net annualized return of 22 % versus 15 % for a baseline metals index, illustrating the upside from targeted critical‑materials exposure.
Actionable Portfolio Blueprint (2026)
- Core Battery Layer (45 % of metals allocation)
- 30 % Global X Lithium & Battery Tech (LIT)
- 10 % Amplify Advanced Battery Materials (BATT)
- 5 % iShares MSCI Global Metals & Mining (PICK) for copper/nickel exposure
- Critical‑Materials Layer (35 % of metals allocation)
- 20 % VanEck Rare Earth/Critical Materials (REMX)
- 10 % invesco S&P SmallCap Materials (PSCM) for niche miners
- 5 % direct exposure to recycling plays (e.g., Li‑Cycle) via a thematic sub‑ETF
- Diversification & Hedging (20 % of metals allocation)
- 10 % commodity‑linked ETFs with inflation‑adjusted yield (e.g., iShares S&P GSCI Commodity Index)
- 10 % currency‑hedged exposure to non‑USD base‑metal producers (e.g., HSBC MSCI Global Metals Hedged)
*Rebalance quarterly to capture earnings cycles and policy announcements.
Future Outlook: 2026‑2028
- Policy trajectory: The U.S. Inflation Reduction Act’s 2026 amendment introduces a 15 % tax credit for domestic rare‑earth production, likely lifting REMX’s valuation multiples by 0.3‑0.5 ×.
- Technology shift: solid‑state battery commercialization is projected for 2027, suggesting early‑stage firms in BATT could see a “first‑mover” premium.
- supply‑chain resilience: Multi‑regional mining projects (e.g., Canada’s nickel‑cobalt corridor, Australia’s lithium‑bromine cluster) are slated to reach operational status by 2027, providing additional upside for diversified ETFs.
Bottom Line: By anchoring to top‑performing battery, rare‑earth, and diversified critical‑materials ETFs, investors can capture the secular growth wave while mitigating commodity and geopolitical risks.The outlined allocation framework offers a pragmatic path to profit from the metals boom that is expected to continue through 2026 and beyond.
