Given how geopolitical risks and energy prices have rattled markets over the past few months, broad commodity allocations have offered an increasingly attractive value proposition as of late. Not only do commodities offer lower exposure to the equity and bond markets, but certain areas of the commodities market are well-positioned to take advantage of the current macroeconomic environment.
Key Takeaways:
- With commodities already offering a potent use case for diversifying portfolios, investors may want to consider specific exposure to critical materials.
- Critical materials are crucial components for a variety of industries, including the clean energy space, which is already seeing significant spending and favorable policy working in its favor.
- The Sprott Critical Materials ETF (SETM) can help advisors and investors maintain focused exposure to the global critical materials sector.
Targeted allocation towards the critical materials space could make a great deal of sense right now. Not only are critical materials used in key sectors such as defense and tech manufacturing, their utilization in clean energy is making them even more essential right now.
In a recent webcast, Steve Schoffstall, managing partner and head of ETFs at Sprott Asset Management, examined how momentum within the clean energy industry, and growing interest in energy security, are working in favor of critical materials. During the webcast, Schoffstall noted that China has been continuing to expand its clean energy buildout. Not only to harness the inherent environmental advantages of clean energy, but to also help mitigate the country’s dependence on other nations for energy as a whole. Thus far, China has done so through its own robust critical materials supply chain.
See more: How to Play the Ex-China Rare Earths Boom With REXC
Given that China has a dominant hold on critical materials — which are heavily utilized in clean energy — countries like the U.S. are now putting cash on the table to catch up to China. Of course, this can work very well in favor of those already engaged with the critical materials space. Furthermore, this race for energy security is happening while other countries and companies around the globe are also building out their clean energy initiatives.
Clean Energy Spending Surge Could Work in SETM's Favor
“Just last year, alone, we saw about $2.3 trillion invested in the energy transition. A very significant source of that structural growth that, in most cases, sits outside of global economic health, which is what we’re typically used to seeing for a lot of commodity cycles,” Schoffstall said. “When you look at many of the critical materials, the main takeaway is that electric vehicles depend on a range of them. Also, copper is a key component across many aspects of the energy transition and clean energy technologies, and no single metal is required. It’s a basket of metals that’s needed to fuel the growing electricity demand.”
See more: Copper’s Comeback: April Price Rebound Showcases Resilience
The Sprott Critical Materials ETF (SETM ) can help investors gain focused exposure to the critical materials industry. By investing in a diverse range of companies engaged with critical materials across the globe, SETM allows investors to capture the growth of this essential industry through a single fund.
Crucially, SETM’s global approach to critical materials exposure is offering significant returns over the last month. As of April 30, 2026, the fund’s NAV had risen 12.12% over the previous month.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Content Hub.
Disclosures
An investor should consider the investment objectives, risks, charges, and expenses carefully before investing. To obtain a Prospectus, which contains this and other information, contact your financial professional or call 888.622.1813. Read the Prospectus carefully before investing, which can also be found by clicking one of the links below.
Past performance is no guarantee of future results. One cannot invest directly in an index.
Funds that emphasize investments in small/mid-cap companies will generally experience greater price volatility. Diversification does not eliminate the risk of investment losses. ETFs are considered to have continuous liquidity because they allow an individual to trade throughout the day. A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These costs, which are not reflected in annual fund operating expenses, affect the Fund’s performance.
Sprott Asset Management USA, Inc. is the Investment Adviser to the ETFs. ALPS Distributors, Inc. is the Distributor for the ETFs and is a registered broker-dealer and FINRA Member. ALPS Distributors, Inc. is not affiliated with Sprott Asset Management USA, Inc. or VettaFi.
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URN, COPP, COPJ, NIKL, SGDM, SGDJ, SLVR, GBUG, METL
Physical Bullion Funds: PHYS, PSLV, CEF, and SPPP.
Gold and precious metals are referred to with terms of art like store of value, safe haven and safe asset. These terms should not be construed to guarantee any form of investment safety. While “safe” assets like gold, Treasuries, money market funds and cash generally do not carry a high risk of loss relative to other asset classes, any asset may lose value, which may involve the complete loss of invested principal.
