Disruptive materials from Global X
Mirae Asset subsidiary Global X is launching a new thematic ETF based around global mining companies deemed crucial to new technologies.
The Global X Disruptive Materials ETF (DMAT) will track the Solactive Disruptive Materials Index, which has been purpose-built for this ETF.
To get in the index, companies must make half their revenue from producing; rare earth elements, zinc, palladium, platinum, nickel, manganese, lithium, graphene, graphite, copper, cobalt and carbon fibre.
Companies are identified the usual way: keyword searches and revenue purity tests. Then to make the final cut they must meet certain size and liquidity requirements.
The end result is a portfolio dominated by mining companies from China, Canada and South Africa.
The fund charges 0.59%.
Bernie’s commentary – just a battery tech fund?
Looking at this portfolio, I noticed two things.
First, it is quite similar to the VanEck Rare Earth/Strategic Metals ETF (REMX). REMX targets the same mining companies as DMAT. The only notable difference I can see in terms of sectors covered is the carbon fibre stuff. The weighting schemes are also different. REMX holds $920 million, which may make it seem like a mighty fund. However, it launched in October 2010, meaning it has had plenty of run time. The funds also charge the same 0.59% fee.
Second, the real underlying theme here is presumably electronification and battery tech. (Characterising Freeport-McMoRan and Sibanye Stillwater as “Disruptive materials” seems to me a bit of a marketing wheeze. I’m not sure what is disruptive about 100-year-old copper and platinum mining businesses?) Copper, lithium, nickel and cobalt have all rallied the past couple of years as part of the broader battery rally. This is logical as they’re the primary elements used to make batteries. Lithium especially. So I guess the question is: why should investors go the miners route rather than battery companies like Tesla?
Still, competition is always welcome. And this does provide a new spin of sorts on rare earth and strategic metal