3 Rare-Earth ETFs That Help Investors Balance Exposure and Risk

Key Points

• China's rare-earth dominance stems from decades of investment in refining and processing infrastructure rather than superior mineral deposits.
• The Trump administration is funding U.S. companies like MP Materials, USA Rare Earth, Vulcan Elements, and ReElement Technologies to rebuild domestic refining capacity.
• Investors seeking diversified exposure to this long-term theme can consider ETFs such as REMX, EART, and SETM, which hold dozens of related companies.

It’s not hard to see why investing in rare-earth metals is a long-term investment theme. Rare-earth metals are 17 metallic elements with unusual magnetic, optical, and conductive properties that make them indispensable to modern technology, including:

• Defense and national security

• Artificial intelligence, semiconductors, and data centers

• Electrification and clean energy

The rare-earth story is frequently positioned as one of scarcity, but that isn't the case. Many countries have abundant rare-earth deposits, including the United States, Australia, Canada, Brazil, and India.

China's dominance in rare-earths stems from decades of developing its midstream processing industry, rather than just controlling the largest deposits. Beginning in the 1980s, China invested heavily in refining, separation technology, chemical engineering capacity, and magnet manufacturing—areas that other countries avoided because of cost, environmental complexity, and long development timelines.

Rare-earth refining is chemically intensive and produces radioactive byproducts, and China’s willingness to subsidize the industry and manage the environmental burden allowed it to scale rapidly while competitors fell behind. This is where today’s investment opportunities exist.

Why Rare-Earth Refining Is the Real Investment Opportunity

The bottleneck in rare-earth is in the refining process. This was a conscious choice that was made by China (to invest in refining) and many other countries, including the United States, which chose not to invest in refining.

The Trump administration is accelerating domestic rare‑earth development through targeted industrial policy, including federal funding, strategic partnerships, and streamlined permitting for critical‑mineral projects. Rather than broad deregulation, the focus has been on removing specific bottlenecks that historically made U.S. refining uneconomic—such as long environmental review timelines and limited federal support for midstream processing.

These policy shifts are designed to help companies begin refining rare-earth elements inside the United States for the first time in decades. As a result, several U.S. companies are now receiving federal support to build refining, separation, and magnet‑manufacturing capacity—marking the first major rebuild of the domestic rare‑earth supply chain in more than 30 years.

• MP Materials NYSE: MP: The Pentagon became the company’s largest shareholder after buying $400 million in preferred stock in July 2025. The investment supports the company’s expansion of rare-earth processing and the construction of a second magnet manufacturing plant.

• USA Rare Earth NASDAQ: USAR: The Trump administration announced a partnership in early 2026 that gives the company access to $1.6 billion in funding. The deal also issued 16.1 million shares to the Department of War, which could increase the government’s stake to between 12% and 25%, depending on warrant exercise.

• Vulcan Elements & ReElement Technologies: The Department of War issued these rare-earth startups a $620 million loan and $50 million in federal incentives. The investment is to help the companies scale their magnet and ore processing capacity.

This is where some investors may believe the opportunity carries too much risk. After all, there are no guarantees in this sector, and the real payoff is likely years away. However, for patient investors with a long-term outlook, that’s an ideal argument for investing in an exchange-traded fund (ETF) that includes dozens of holdings in the sector. This provides exposure to the entire supply chain without overreliance on one or two companies.

REMX: A Diversified ETF for Rare-Earth Investing

The VanEck Rare Earth and Strategic Metals ETF NYSEARCA: REMX tracks an index of global companies that mine, refine, or recycle rare-earth and strategic metals.

The fund is an ideal option for investors looking for a direct proxy for the current export-control backdrop,

REMX is a weighted average market cap fund with 38 holdings. Albemarle NYSE: ALB holds the most weight in the fund at around 7.2%. The fund has $2.4 billion of assets under management (AUM) with a net expense ratio of 0.58%.

REMX is up over 91% in the last 12 months. But a sharp sell-off that started in May has pushed the stock price into the middle of its 52-week range, which may create a solid entry point for investors.

EART ETF Targets the Companies Powering Future Technologies

The Global X Rare Earth & Critical Materials ETF NASDAQ: EART is a more targeted play on the rare-earth theme.

The fund targets companies that produce rare-earth components and other raw or composite materials that are essential to expanding the development of critical technologies such as electric vehicles (EVs), energy storage, robotics, and radar systems.

The fund has over 50 holdings that are weighted according to their Free Float Market Capitalization. The fund currently has around $40 million of AUM with a net expense ratio of 0.59%.

EART is up over 60% in the last 12 months. Like the REMX, the fund has been in a downtrend since mid-May, giving investors a similar opportunistic setup.

SETM ETF Provides Diversified Critical Materials Exposure

In contrast to the EART, which takes a narrower focus on the rare-earth sector, the Sprott Critical Materials ETF NASDAQ: SETM takes a broader view and includes a focus on several critical metals that are essential to the modern industrial economy. 

For example, in percentage terms, uranium companies have the most exposure in the fund.

With its focus on a wider range of metals, the fund has at any given time between 125 and 170 holdings, which provides significant diversification. The fund has close to $560 million of AUM and a net expense ratio of 0.65%.

SETM is up 74% in the last 12 months. But like the broader sector, the fund is down over 14% in the last three months.